Mr. JusticeWashington. The first and most important [Volume 3, Page 436]
point to be decided in this cause turns essentially upon the
question, whether the obligation of a contract is impaired
by a state bankrupt or insolvent law, which discharges the
person and the future acquisitions of the debtor from his
liability under a contract entered into in that state after the
passage of the act.

This question has never before been distinctly presented
to the consideration of this court and decided, although it
has been supposed by the judges of highly respectable
state court, that it was decided in the case of M'Millan v.
M'Neill (4 Wheat. Rep., 209). That was the case of a debt
contracted by two citizens of South Carolina, in that state,
the discharge of which had a view to no other state. The
debtor afterwards removed to the territory of Louisiana,
where he was regularly discharged, as an insolvent, from
all his debts, under an act of the legislature of that state,
passed prior to the time when the debt in question was
contracted. To an action brought by the creditor in the
District Court of Louisiana, the defendant plead in bar his
discharge under the law of that territory, and it was contended
by the counsel for the debtor in this court, that the
law under which the debtor was discharged having passed
before the contract was made, it could not be said to impair
its obligation. The cause was argued on one side only,
and it would seem from the report of the case that no
written opinion was prepared by the court. The Chief Justice
stated that the circumstance of the state law under
which the debt was attempted to be discharged having
been passed before the debt was contracted, made no difference
in the application of the principle, which had been
asserted by the court in the case of Sturges v. Crowninshield.
The correctness of this position is believed to be incontrovertible.
The principle alluded to was, that a state bankrupt
law which impairs the obligation of a contract, is unconstitutional
in its application to such contract. In that
case, it is true, the contract preceded in order of time the
act of assembly, under which the debtor was discharged,
although it was not thought necessary to notice that circumstance
in the opinion which was pronounced. The
principle, however, remained in the opinion of the court,
delivered in M'Millan v. M'Neill, unaffected by the circumstance
that the law of Louisiana preceded a contract
made in another state, since that law having no extraterritorial
force, never did at any time govern or affect the
obligation of such contract. It could not, therefore, be correctly
said to be prior to the contract in reference to its
obligation, since, if upon legal principles it could affect the
contract, that could not happen until the debtor became a
citizen of Louisiana, and that was subsequent to the contract.
But I hold the principle to be well established, that a
discharge under the bankrupt laws of one government
does not affect contracts made or to be executed under
another, whether the law be prior or subsequent in the
date to that of the contract; and this I take to be the only
point really decided in the case alluded to. Whether the
Chief Justice was correctly understood by the reporter
when he is supposed to have said "that this case was not
distinguishable in principle from the preceding case of
Sturges v. Crowninshield," it is not material at this time to
inquire, because I understand the meaning of these
expressions to go no farther than to intimate that there
was no distinction between the cases as to the constitutional
objection, since it professed to discharge a debt contracted
in another state, which, at the time it was contracted,
was not within its operation, nor subject to be
discharged by it. The case now to be decided is that of a
debt contracted in the state of New York by a citizen of
that state, from which he was discharged so far as he constitutionally
could be under a bankrupt law of that state,
in force at the time when the debt was contracted. It is a
case, therefore, that bears no resemblance to the one just
noticed.

I come now to the consideration of the question, which
for the first time has been directly brought before this
court for judgment. I approach it with more than ordinary
sensibility, not only on account of its importance, which
must be acknowledged by all, but of its intrinsic difficulty,
which every step I have taken in arriving at a conclusion
with which my judgment could in any way be satisfied, has
convinced me attends it. I have examined both sides of this
great question with the most sedulous care, and the most
anxious desire to discover which of them, when adopted,
would be most likely to fulfil the intentions of those who
framed the constitution of the United States. I am far
from asserting that my labors have resulted in entire success.
They have lead me to the only conclusion by which I
can stand with any degree of confidence; and yet, I should
be disingenuous were I to declare, from this place, that I
embrace it without hesitation, and without a doubt of its
correctness. The most that candor will permit me to say
upon the subject, is that I see, or think I see, my way more
clear on the side which my judgment leads me to adopt
than on the other, and it must remain for others to decide
whether the guide I have chosen has been a safe one or
not.

It has constantly appeared to me throughout the different
investigations of this question, to which it has been my
duty to attend, that the error of those who controvert the
constitutionality of the bankrupt law under consideration
in its application to this case, if they be in error at all, has
arisen from not distinguishing accurately between a law
which impairs a contract, and one which impairs its obligation.
A contract is defined by all to be an agreement to
do, or not to do, some particular act; and in the construction
of this agreement, depending essentially upon the will
of the parties between whom it is formed, we seek for their
intention with a view to fulfil it. Any law, then, which enlarges,
abridges, or in any manner changes this intention
when it is discovered, necessarily impairs the contract itself,
which is but the evidence of that intention. The manner,
or the degree, in which this change is effected, can in
no respect influence this conclusion; for whether the law
affect the validity, the construction, the duration, the
mode of discharge, or the evidence of the agreement, it
impairs the contract, though it may not do so to the same
extent in all the supposed cases. Thus, a law which declares
that no action shall be brought whereby to charge a
person upon his agreement to pay the debt of another, or
upon an agreement relating to lands, unless the same be
reduced to writing, impairs a contract made by parol [Volume 3, Page 437]
whether the law precede or follow the making of such contract;
and if the argument that this law also impairs, in the
former case, the obligation of the contract, be sound, it
must follow that the statute of frauds and all other statutes
which in any manner meddle with contracts, impair their
obligation, and are consequently within the operation of
this section and article of the constitution. It will not do to
answer that in the particular case put, and in others of the
same nature, there is no contract to impair, since the preexisting
law denies all remedy for its enforcement, or forbids
the making of it, since it is impossible to deny that the
parties have expressed their will in the form of a contract,
notwithstanding the law denies to it any valid obligation.

This leads us to a critical examination of the particular
phraseology of that part of the above section which relates
to contracts. It is a law which impairs the obligation of contracts,
and not the contracts themselves, which is interdicted.
It is not to be doubted, that this term, obligation,
when applied to contracts, was well considered and
weighed by those who framed the constitution, and was
intended to convey a different meaning from what the
prohibition would have imported without it. It is this
meaning of which we are all in search.

What is it, then, which constitutes the obligation of a
contract? The answer is given by the Chief Justice, in the
case of Sturges v. Crowinshield, to which I readily assent
now, as I did then; it is the law which binds the parties to
perform their agreement. The law, then, which has this
binding obligation, must govern and control the contract
in every shape in which it is intended to bear upon it,
whether it affect its validity, construction, or discharge.

But the question, which law is referred to in the above
definition, still remains to be solved. It cannot for a moment
be conceded that the mere moral law is intended,
since the obligation which that imposes is altogether
of the imperfect kind, which the parties to it are free to
obey, or not, as they please. It cannot be supposed, that it
was with this law the grave authors of this instrument were
dealing.

The universal law of all civilized nations, which declares
that men shall perform that to which they have agreed,
has been supposed by the counsel who have argued this
cause for the defendant in error, to be the law which is
alluded to; and I have no objection to acknowledging its
obligation, whilst I must deny that it is that which exclusively
governs the contract. It is upon this law that the obligation
which nations acknowledge to perform their compacts
with each other is founded, and I therefore feel no
objection to answer the question asked by the same counsel--what
law it is which constitutes the obligation of the
compact between Virginia and Kentucky?--by admitting
that it is this common law of nations which requires them
to perform it. I admit further, that it is this law which creates
the obligation of a contract made upon a desert spot,
where no municipal law exists, and (which was another
case put by the same counsel) which contract, by the tacit
assent of all nations, their tribunals are authorized to enforce.

But can it be seriously insisted, that this, any more than
the moral law upon which it is founded, was exclusively in
the contemplation of those who framed this constitution?
What is the language of this universal law? It is simply that
all men are bound to perform their contracts. The injunction
is as absolute as the contracts to which it applies. It
admits of no qualification, and no restraint, either as to its
validity, construction, or discharge, further than may be
necessary to develop the intention of the parties to the
contract. And if it be true, that this is exclusively the law
to which the constitution refers us, it is very apparent that
the sphere of state legislation upon subjects connected
with the contracts of individuals, would be abridged beyond
what it can for a moment be believed the sovereign
states of this Union would have consented to; for it will be
found, upon examination, that there are few laws which
concern the general police of a state, or the government
of its citizens, in their intercourse with each other, or with
strangers, which may not in some way or other affect the
contracts which they have entered into, or may thereafter
form. For what are laws of evidence, or which concern
remedies--frauds and perjuries--laws of registration, and
those which affect landlord and tenant, sales at auction,
acts of limitation, and those which limit the fees of professional
men, and the charges of tavern-keepers, and a multitude
of others which crowd the codes of every state, but
laws which may affect the validity, construction or duration,
or discharge of contracts? Whilst I admit, then, that
this common law of nations, which has been mentioned,
may form in part the obligation of a contract, I must unhesitatingly
insist, that this law is to be taken in strict subordination
to the municipal laws of the land where the
contract is made, or is to be executed. The former can be
satisfied by nothing short of performance; the latter may
affect and control the validity, construction, evidence,
remedy, performance and discharge of the contract. The
former is the common law of all civilized nations, and of
each of them; the latter is the peculiar law of each, and is
paramount to the former whenever they come in collision
with each other.

It is, then, the municipal law of the state, whether that
be written or unwritten, which is emphatically the law of
the contract made within the state, and must govern it
throughout, wherever its performance is sought to be enforced.

It forms, in my humble opinion, a part of the contract,
and travels with it wherever the parties to it may be found.
It is so regarded by all the civilized nations of the world,
and is enforced by the tribunals of those nations according
to its own forms, unless the parties to it have otherwise
agreed, as where the contract is to be executed in, or refers
to the laws of, some other country than that in which
it is formed, or where it is of an immoral character, or
contravenes the policy of the nation to whose tribunals the
appeal is made; in which latter cases, the remedy which
the comity of nations affords for enforcing the obligation
of contracts wherever formed, is denied. Free from these
objections, this law, which accompanies the contract, as
forming a part of it, is regarded and enforced everywhere,
whether it affect the validity, construction, or discharge of
the contract. It is upon this principle of universal law, that
the discharge of the contract, or of one of the parties to it, [Volume 3, Page 438]
by the bankrupt laws of the country where it was made,
operates as a discharge everywhere.

If, then, it be true that the law of the country where the
contract is made, or to be executed, forms a part of that
contract, and of its obligation, it would seem to be somewhat
of a solecism to say that it does at the same time impair
that obligation.

But, it is contended, that if the municipal law of the state
where the contract is so made, form a part of it, so does
that clause of the constitution which prohibits the states
from passing laws to impair the obligation of contracts;
and, consequently, that the law is rendered inoperative by
force of its controlling associate. All this I admit, provided
it be first proved that the law so incorporated with, and
forming a part of the contract, does, in effect, impair its
obligation; and before this can be proved, it must be affirmed,
and satisfactorily made out, that if, by the terms of
the contract, it is agreed that, on the happening of a certain
event, as, upon the future insolvency of one of the
parties, and his surrender of all his property for the benefit
of his creditors, the contract shall be considered as
performed and at an end, this stipulation would impair
the obligation of the contract. If this proposition can be
successfully affirmed, I can only say that the soundness of
it is beyond the reach of my mind to understand.

Again, it is insisted that if the law of the contract forms
a part of it, the law itself cannot be repealed without impairing
the obligation of the contract. This proposition I
must be permitted to deny. It may be repealed at any time
at the will of the legislature, and then it ceases to form any
part of those contracts which may afterwards be entered
into. The repeal is no more void than a new law would be
which operates upon contracts to affect their validity, construction,
or duration. Both are valid, (if the view which I
take of this case be correct) as they may affect contracts
afterwards formed; but neither are so, if they bear upon
existing contracts; and, in the former case, in which the
repeal contains no enactment, the constitution would forbid
the application of the repealing law to past contracts,
and to those only.

To illustrate this argument, let us take four laws, which,
either by new enactments, or by the repeal of former laws,
may affect contracts as to their validity, construction, evidence
or remedy.

Laws against usury are of the first description.

A law which converts a penalty, stipulated for by the
parties, as the only atonement for a breach of the contract,
into a mere agreement for a just compensation, to be measured
by the legal rate of interest, is of the second.

The statute of frauds, and the statute of limitations, may
be cited as examples of the two last.

The validity of these laws can never be questioned by
those who accompany me in the view which I take of the
question under consideration, unless they operate, by their
express provisions, upon contracts previously entered into;
and even then they are void only so far as they do so operate,
because, in that case, and in that case only, do they
impair the obligation of those contracts. But if they equally
impair the obligation of contracts subsequently made,
which they must do if this be the operation of a bankrupt
law upon such contracts, it would seem to follow, that all
such laws, whether in the form of new enactments, or of
repealing laws, producing the same legal consequences,
are made void by the constitution; and yet the counsel for
the defendants in error have not ventured to maintain so
alarming a proposition.

If it be conceded that those laws are not repugnant to
the constitution, so far as they apply to subsequent contracts,
I am yet to be instructed how to distinguish between
those laws, and the one now under consideration. How has
this been attempted by the learned counsel who have argued
this cause upon the ground of such a distinction?

They have insisted that the effect of the law first supposed,
is to annihilate the contract in its birth, or rather to
prevent it from having a legal existence, and, consequently,
that there is no obligation to be impaired. But this
is clearly not so, since it may legitimately avoid all contracts
afterwards entered into, which reserve to the lender a
higher rate of interest than this law permits.

The validity of the second law is admitted, and yet this
can only be in its application to subsequent contracts; for
it has not, and I think it cannot, for a moment, be maintained,
that a law which, in express terms, varies the construction
of an existing contract, or which, repealing a former
law, is made to produce the same effect, does not
impair the obligation of that contract.

The statute of frauds, and the statute of limitations,
which have been put as examples of the third and fourth
classes of laws, are also admitted to be valid, because they
merely concern the modes of proceeding in the trial of
causes. The former, supplying a rule of evidence, and the
latter, forming a part of the remedy given by the legislature
to enforce the obligation, and likewise providing a
rule of evidence.

All this I admit. But how does it happen that these laws,
like those which affect the validity and construction of
contracts, are valid as to subsequent, and yet void as to
prior and subsisting contracts? For we are informed by the
learned judge who delivered the opinion of this court in
the case of Sturges v. Crowninshield, that, "if, in a state
where six years may be pleaded in bar to an action of assumpsit,
a law should pass, declaring that contracts already
in existence, not barred by the statute, should be construed
within it, there could be little doubt of its unconstitutionality."

It is thus most apparent that, whichever way we turn,
whether to laws affecting the validity, construction, or discharges
of contracts, or the evidence or remedy to be employed
in enforcing them, we are met by this overruling
and admitted distinction, between those which operate retrospectively,
and those which operate prospectively. In all
of them the law is pronounced to be void in the first class
of cases, and not so in the second.

Let us stop, then, to make a more critical examination
of the act of limitations, which, although it concerns the
remedy, or, if it must be conceded, the evidence, is yet
void or otherwise, as it is made to apply retroactively, or
prospectively, and see if it can, upon any intelligible principle,
be distinguished from a bankrupt law, when applied
in the same manner. What is the effect of the former? The [Volume 3, Page 439]
answer is, to discharge the debtor and all his future acquisitions
from his contract; because he is permitted to plead
it in bar of any remedy which can be instituted against
him, and consequently in bar or destruction of the obligation
which his contract imposed upon him. What is the
effect of a discharge under a bankrupt law? I can answer
this question in no other terms than those which are given
to the former question. If there be a difference, it is one
which, in the eye of justice at least, is more favorable to
the validity of the latter than of the former; for in the one,
the debtor surrenders everything which he possesses towards
the discharge of his obligation, and in the other, he
surrenders nothing, and sullenly shelters himself behind a
legal objection with which the law has provided him, for
the purpose of protecting his person, and his present, as
well as his future acquisitions, against the performance of
his contract.

It is said that the former does not discharge him absolutely
from his contract, because it leaves a shadow sufficiently
substantial to raise a consideration for a new promise
to pay. And is not this equally the case with a
certificated bankrupt, who afterwards promises to pay a
debt from which his certificate had discharged him? In the
former case, it is said, the defendant must plead the statute
in order to bar the remedy, and to exempt him from
his obligation. And so, I answer, he must plead his discharge
under the bankrupt law, and his conformity to it,
in order to bar the remedy of his creditor, and to secure
to himself a like exemption. I have, in short, sought in vain
for some other grounds on which to distinguish the two
laws from each other, than those which were suggested at
the bar. I can imagine no other, and I confidently believe
that none exist which will bear the test of a critical examination.

To the decision of this court, made in the case of Sturges
v. Crowninshield, and to the reasoning of the learned judge
who delivered that opinion, I entirely submit; although I
did not then, nor can I now bring my mind to concur in
that part of it which admits the constitutional power of the
state legislatures to pass bankrupt laws, by which I understand,
those laws which discharge the person and the future
acquisitions of the bankrupt from his debts. I have
always thought that the power to pass such a law was exclusively
vested by the constitution in the legislature of the
United States. But it becomes me to believe that this opinion
was, and is incorrect, since it stands condemned by the
decision of a majority of this court, solemnly pronounced.

After making this acknowledgment, I refer again to the
above decision with some degree of confidence, in support
of the opinion to which I am now inclined to come, that a
bankrupt law, which operates prospectively, or in so far as
it does so operate, does not violate the constitution of the
United States. It is there stated, "that, until the power to
pass uniform laws on the subject of bankruptcies be exercised
by Congress, the states are not forbidden to pass a
bankrupt law, provided it contain no principle which violates
the tenth section of the first article of the constitution
of the United States." The question in that case was,
whether the law of New York, passed on the third of
April, 1811, which liberates, not only the person of the
debtor, but discharges him from all liability for any debt
contracted previous, as well as subsequent to his discharge,
on his surrendering his property for the use of his creditors,
was a valid law under the constitution in its application
to a debt contracted prior to its passage? The court
decided that it was not, upon the single ground that it impaired
the obligation of that contract. And if it be true,
that the states cannot pass a similar law to operate upon
contracts subsequently entered into, it follows inevitably,
either that they cannot pass such laws at all, contrary to
express declaration of the court, as before quoted, or that
such laws do not impair the obligation of contracts subsequently
entered into; in fine, it is a self-evident proposition,
that every contract that can be formed, must either
precede, or follow, any law by which it may be affected.

I have, throughout the preceding part of this opinion,
considered the municipal law of the country where the
contract is made, as incorporated with the contract,
whether it affects its validity, construction, or discharge.
But I think it quite immaterial to stickle for this position,
if it be conceded to me, what can scarcely be denied, that
this municipal law constitutes the law of the contract so
formed, and must govern it throughout. I hold the legal
consequences to be the same, in which every view the law,
as it affects the contract, is considered.

I come now to a more particular examination and construction
of the section under which this question arises;
and I am free to acknowledge that the collocation of the
subjects for which it provides has made an irresistible
impression upon my mind, much stronger, I am persuaded,
than I can find language to communicate to the
minds of others.

It declares, that "no state shall coin money, emit bills of
credit, make anything but gold and silver coin a tender in
payment of debts." These prohibitions, associated with the
powers granted to Congress "to coin money, and to regulate
the value thereof, and of foreign coin," most obviously
constitute members of the same family, being upon the
same subject, and governed by the same policy.

This policy was to provide a fixed and uniform standard
of value throughout the United States, by which the commercial
and other dealings between the citizens thereof, or
between them and foreigners, as well as the moneyed
transactions of the government, should be regulated. For
it might well be asked, why vest in Congress the power to
establish a uniform standard of value by the means
pointed out, if the states might use the same means, and
thus defeat the uniformity of the standard, and, consequently,
the standard itself? And why establish a standard
at all, for the government of the various contracts might
afterwards be discharged by a different standard, or by
that which is not money, under the authority of state tender
laws? It is obvious, therefore, that these prohibitions,
in the 10th section, are entirely homogeneous, and are essential
to the establishment of a uniform standard of
value, in the formation and discharge of contracts. It is for
this reason, independent of the general phraseology which
is employed, that the prohibition, in regard to state tender
laws, will admit of no construction which would confine it
to state laws which have a restrospective operation.

[Volume 3, Page 440]

The next class of prohibitions contained in this section
consists of bills of attainder, ex post facto laws, and laws impairing
the obligation of contracts.

Here, too, we observe, as I think, members of the same
family brought together in the most intimate connection
with each other. The states are forbidden to pass any bill
of attainder or ex post facto law, by which a man shall be
punished criminally or penally, by loss of life, of his liberty,
property, or reputation, for an act which, at the time
of its commission, violated no existing law of the land.
Why did the authors of the constitution turn their attention
to this subject, which, at the first blush, would appear
to be peculiarly fit to be left to the discretion of those who
have the police and good government of the state under
their management and control? The only answer to be
given is, because laws of this character are oppressive, unjust,
and tyrannical; and, as such, are condemned by the
universal sentence of civilized man. The injustice and tyranny
which characterizes ex post facto laws, consists altogether
in their retrospective operation, which applies with
equal force, although not exclusively, to bills of attainder.

But if it was deemed wise and proper to prohibit state
legislation as to retrospective laws, which concern, almost
exclusively, the citizens and inhabitants of the particular
state in which this legislation takes place, how much more
did it concern the private and political interests of the citizens
of all the states, in their commercial and ordinary
intercourse with each other, that the same prohibition
should be extended civilly to the contracts which they
might enter into?

If it were proper to prohibit a state legislature to pass a
retrospective law which should take from the pocket of
one of its own citizens a single dollar, as a punishment for
an act which was innocent at the time it was committed,
how much more proper was it to prohibit laws of the same
character precisely which might deprive the citizens of
other states, and foreigners, as well as citizens of the same
state, of thousands to which, by their contracts, they were
justly entitled, and which they might possibly have realized
but for such state interference? How natural, then, was it,
under the influence of these considerations, to interdict
similar legislation in regard to contracts, by providing that
no state shall pass laws impairing the obligation of past
contracts? It is true that the two first of these prohibitions
apply to laws of a criminal, and the last to laws of a civil
character; but if I am correct in my view of the spirit and
motives of these prohibitions, they agree in the principle
which suggested them. They are founded upon the same
reason, and the application of it is at least as strong to the
last as it is to the two first prohibitions.

But these reasons are altogether inapplicable to laws of
a prospective character. There is nothing unjust or tyrannical
in punishing offenses prohibited by law, and committed
in violation of that law. Nor can it be unjust or oppressive
to declare by law that contracts subsequently
entered into may be discharged in a way different from
that which the parties have provided, but which they
know, or may know, are liable, under certain circumstances,
to be discharged in a manner contrary to the provisions
of their contract.

Thinking, as I have always done, that the power to pass
bankrupt laws was intended by the authors of the constitution
to be exclusive in Congress, or, at least, that they
expected the power vested in that body would be exercised
so as effectually to prevent its exercise by the states, it is
the more probable that, in reference to all other interferences
of the state legislatures upon the subject of contracts,
retrospective laws were alone in the contemplation of the
convention.

In the construction of this clause of the tenth section
of the constitution, one of the counsel for the defendant
supposed himself at liberty so to transpose the provisions
contained in it as to place the prohibition to pass laws
impairing the obligation of contracts in juxtaposition
with the other prohibition to pass laws making anything
but gold and silver coin a tender in payment of debts, inasmuch
as the two provisions relate to the subject of contracts.

That the derangement of the words, and even sentences
of a law, may sometimes be tolerated, in order to arrive at
the apparent meaning of the legislature, to be gathered
from other parts, or from the entire scope of the law, I
shall not deny. But I should deem it a very hazardous rule
to adopt in the construction of an instrument so maturely
considered as this constitution was by the enlightened
statesmen who framed it, and so severely examined and
criticised by its opponents in the numerous state conventions
which finally adopted it. And if, by the construction
of this sentence, arranged as it is, or as the learned counsel
would have it to be, it could have been made out that the
power to pass prospective laws, affecting contracts, was denied
to the states, it is most wonderful that not one voice
was raised against the provision, in any of those conventions,
by the jealous advocates of state rights, nor even an
amendment proposed, to explain the clause, and to exclude
a construction which trenches so extensively upon
the sphere of state legislation.

But, although the transposition which is contended for
may be tolerated in cases where the obvious intention of
the legislature can in no other way be fulfilled, it can never
be admitted in those where consistent meaning can be
given to the whole clause as its authors thought proper to
arrange it, and where the only doubt is, whether the construction
which the transposition countenances, or that
which results from the reading which the legislature has
thought proper to adopt, is most likely to fulfil the supposed
intention of the legislature. Now, although it is true
that the prohibition to pass tender laws of a particular description,
and laws impairing the obligation of contracts,
relate, both of them, to contracts, yet the principle which
governs each of them, clearly to be inferred from the subjects
with which they stand associated, is altogether different;
that of the first forming part of a system for fixing a
uniform standard of value, and, of the last, being founded
on a denunciation of retrospective laws. It is, therefore,
the safest course, in my humble opinion, to construe this
clause of the section according to the arrangement which
the convention has thought proper to make of its different
provisions. To insist upon a transposition, with a view to
warrant one construction rather than the other, falls little [Volume 3, Page 441]
short, in my opinion, of a begging of the whole question
in controversy.

But why, it has been asked, forbid the states to pass laws
making anything but gold and silver coin a tender in payment
of debts, contracted subsequent, as well as prior, to
the law which authorizes it; and yet confine the prohibition
to pass laws impairing the obligation of contracts to past
contracts, or in other words, to future bankrupt laws,
when the consequence resulting from each is the same, the
latter being considered by the counsel as being, in truth,
nothing less than tender laws in disguise.

An answer to this question has, in part, been anticipated
by some of the preceding observations. The power to pass
bankrupt laws having been vested in Congress, either as
an exclusive power, or under the belief that it would certainly
be exercised, it is highly probable that state legislation
upon that subject was not within the contemplation of
the convention; or, if it was, it is quite unlikely that the
exercise of the power by the state legislatures would have
been prohibited by the use of terms which, I have endeavored
to show, are inapplicable to laws intended to operate
prospectively. For had the prohibition been to pass laws
impairing contracts, instead of the obligation of contracts,
I admit that it would have borne the construction which is
contended for, since it is clear that the agreement of the
parties in the first case, would be impaired as much by a
prior as it would be by a subsequent bankrupt law. It has,
besides, been attempted to be shown, that the limited restriction
upon state legislation, imposed by the former
prohibition, might be submitted to by the states, whilst the
extensive operation of the latter would have hazarded, to
say the least of it, the adoption of the constitution by the
state conventions.

But an answer, still more satisfactory to my mind, is this:
Tender laws, of the description stated in this section, are
always unjust; and, where there is an existing bankrupt
law at the time the contract is made, they can seldom be
useful to the honest debtor. They violate the agreement of
the parties to it, without the semblance of an apology for
the measure, since they operate to discharge the debtor
from his undertaking, upon terms variant from those by
which he bound himself, to the injury of the creditor, and
unsupported, in many cases, by the plea of necessity. They
extend relief to the opulent debtor, who does not stand in
need of it; as well as to the one who is, by misfortunes,
often unavoidable, reduced to poverty, and disabled from
complying with his engagements. In relation to subsequent
contracts, they are unjust when extended to the former
class of debtors, and useless to the second, since they may
be relieved by conforming to the requisitions of the state
bankrupt law, where there is one. Being discharged by this
law from all his antecedent debts, and having his future
acquisitions secured to him, an opportunity is afforded
him to become once more a useful member of society.

If this view of the subject be correct, it will be difficult
to prove that a prospective bankrupt law resembles in any
of its features, a law which should make anything but gold
and silver coin a tender in payment of debts.

I shall now conclude this opinion, by repeating the acknowledgment
which candor compelled me to make in its
commencement, that the question which I have been examining
is involved in difficulty and doubt. But if I could
rest my opinion in favor of the constitutionality of the law
on which the question arises, on no other ground than this
doubt so felt and acknowledged, that alone would, in my
estimation, be a satisfactory vindication of it. It is but a
decent respect due to the wisdom, the integrity, and the
patriotism of the legislative body, by which any law is
passed, to presume in favor of its validity, until its violation
of the constitution is proved beyond all reasonable doubt.
This has always been the language of this court, when that
subject has called for its decision; and I know that it expresses
the honest sentiments of each and every member
of this bench. I am perfectly satisfied that it is entertained by
those of them from whom it is the misfortune of the majority
of the court to differ on the present occasion, and that
they feel no reasonable doubt of the correctness of the conclusion
to which their best judgment has conducted them.

My opinion is, that the judgment of the court below
ought to be reversed, and judgment given for the plaintiff
in error.

Mr. Justice Johnson. This suit was instituted in Louisiana,
in the Circuit Court of the United States, by Saunders,
the defendant here, against Ogden, upon certain
bills of exchange. Ogden, the defendant there, pleads, in
bar to the action, a discharge obtained, in due form of law,
from the Courts of the State of New-York, which discharge
purports to release him from all debts and demands
existing against him on a specified day. This demand
is one of that description, and the act under which
the discharge was obtained, was the act of New-York of
1801, a date long prior to that of the cause of action on
which this suit was instituted. The discharge is set forth in
the plea, and represents Ogden as "an insolvent debtor,
being, on the day and year therein after mentioned, in
prison, in the city and county of New-York, on execution
issued against him on some civil action," &c. It does not
appear that any suit had ever been instituted against him
by this party, or on this cause of action, prior to the present.
The cause below was decided upon a special verdict,
in which the jury find,

1st. That the acceptance of the bills on which the action
was instituted, was made by Ogden, in the city of New-York,
on the days they severally bear date, the said defendant
then residing in the city of New-York, and continuing
to reside there until a day not specified.

2nd. That under the laws of the State of New-York, in
such case provided, and referred to in the discharge,
(which laws are specially found, &c. meaning the State law
of 1801,) application was made for, and the defendant obtained,
the discharge hereunto annexed.

3d. That, by the laws of New-York, actions on bills of
exchange, and acceptances thereof, are limited to the term
of six years; and,

4th. That at the time the said bills were drawn and accepted,
the drawee and the drawer of the same, were residents
and citizens of the State of Kentucky.

On this state of facts the Court below gave judgment
against Ogden, the discharged debtor.

[Volume 3, Page 442]

We are not in possession of the grounds of the decision
below; and it has been argued here, as having been given
upon the general nullity of the discharge, on the ground
of its unconstitutionality. But, it is obvious, that it might
also have proceeded upon the ground of its nullity as to
citizens of other States, who have never, by any act of their
own, submitted themselves to the lex fori of the State that
gives the discharge--considering the right given by the
constitution to go into the Courts of the United States
upon any contracts, whatever be their lex loci, as modifying
and limiting the general power which States are acknowledged
to possess over contracts formed under control
of their peculiar laws.

This question, however, has not been argued, and must
not now be considered as disposed of by this decision.

The abstract question of the general power of the States
to pass laws for the relief of insolvent debtors, will be alone
considered. And here, in order to ascertain with precision
what we are to decide, it is first proper to consider what
this Court has already decided on this subject. And this
brings under review the two cases of Sturges v. Crowninshield,
and M'Millan v. M'Neal, adjudged in the year 1819,
and contained in the 4th vol. of the Reports. If the marginal
note to the report, or summary of the effect of the
case of M'Millan v. M'Neal, presented a correct view of the
report of that decision, it is obvious, that there would remain
very little, if any thing, for this Court to decide. But
by comparing the note of the Reporter with the facts of
the case, it will be found that there is a generality of
expression admitted into the former, which the case itself
does not justify. The principle recognised and affirmed in
M'Millan v. M'Neal, is one of universal law, and so obvious
and incontestible that it need be only understood to be
assented to. It is nothing more than this, "that insolvent laws
have no extra-territorial operation upon the contracts of other
States; that the principle is applicable as well to the discharges
given under the laws of the States, as of foreign countries; and
that the anterior or posterior character of the law under which the
discharge is given, with reference to the date of the contract,
makes no discrimination in the application of that principle."

The report of the case of Sturges v. Crowninshield needs
also some explanation. The Court was, in that case, greatly
divided in their views of the doctrine, and the judgment
partakes as much of a compromise, as of a legal adjudication.
The minority thought it better to yield something
than risk the whole. And, although their course of reasoning
led them to the general maintenance of the State
power over the subject, controlled and limited alone by the
oath administered to all their public functionaries to maintain
the constitution of the United States, yet, as denying
the power to act upon anterior contracts, could do no
harm, but, in fact, imposed a restriction conceived in the
true spirit of the constitution, they were satisfied to acquiesce
in it, provided the decision were so guarded as to
secure the power over posterior contracts, as well from the
positive terms of the adjudication, as from inferences deducible
from the reasoning of the Court.

The case of Sturges v. Crowninshield, then, must, in its
authority, be limited to the terms of the certificate, and
that certificate affirms two propositions.

1. That a State has authority to pass a bankrupt law,
provided such law does not impair the obligation of contracts
within the meaning of the constitution, and provided
there be no act of Congress in force to establish an
uniform system of bankruptcy, conflicting with such law.

2. That a law of this description, acting upon prior contracts,
is a law impairing the obligation of contracts within
the meaning of the constitution.

Whatever inferences or whatever doctrines the opinion
of the Court in that case may seem to support, the concluding
words of that opinion were intended to control
and to confine the authority of the adjudication to the limits
of the certificate.

I should, therefore, have supposed, that the question of
exclusive power in Congress to pass a bankrupt law was
not now open; but it has been often glanced at in argument,
and I have no objection to express my individual
opinion upon it. Not having recorded my views on this
point in the case of Crowninshield, I avail myself of this
occasion to do so.

So far, then, am I from admitting that the constitution
affords any ground for this doctrine, that I never had a
doubt, that the leading object of the constitution was to
bring in aid of the States a power over this subject, which
their individual powers never could attain to; so far from
limiting, modifying, and attenuating legislative power in its
known and ordinary exercise in favour of unfortunate
debtors, that its sole object was to extend and perfect it, as
far as the combined powers of the States, represented by
the general government, could extend it. Without that
provision, no power would have existed that could extend
a discharge beyond the limits of the State in which it was
given, but with that provision it might be made co-extensive
with the United States. This was conducing to one of
the great ends of the constitution, one which it never loses
sight of in any of its provisions, that of making an American
citizen as free in one State as he was in another. And
when we are told that this instrument is to be construed
with a view to its federative objects, I reply that this view
alone of the subject is in accordance with its federative
character.

Another object in perfect accordance with this, may
have been that of exercising a salutary control over the
power of the States, whenever that power should be exercised
without due regard to the fair exercise of distributive
justice. The general tendency of the legislation of the
States at that time to favour the debtor, was a consideration
which entered deeply into many of the provisions of
the constitution. And as the power of the States over the
law of their respective forums remained untouched by any
other provision of the constitution; when vesting in Congress
the power to pass a bankrupt law, it was worthy of
the wisdom of the Convention to add to it the power to
make that system uniform and universal. Yet, on this subject,
the use of the term uniform, instead of general, may
well raise a doubt whether it meant more than that such a
law should not be partial, but have an equal and uniform
application in every part of the Union. This is in perfect
accordance with the spirit in which various other provisions
of the constitution are conceived.

[Volume 3, Page 443]

For these two objects there appears to have been much
reason for vesting this power in Congress; but for extending
to the grant the effect of exclusiveness over the power
of the States, appears to me not only without reason, but
to be repelled by weighty considerations.

1. There is nothing which, on the face of the constitution,
bears the semblance of direct prohibition on the
States to exercise this power; and it would seem strange
that, if such a prohibition had been in the contemplation
of the Convention, when appropriating an entire section
to the enumeration of prohibitions on the States, they had
forgotten this, if they had intended to enact it.

The antithetical language adopted in that section, as to
every other subject to which the power of Congress had
been previously extended, affords a strong reason to conclude,
that some direct and express allusion to the power
to pass a bankrupt law would have been here inserted also,
if they had not intended that this power should be concurrently,
or, at least, subordinately exercised by the States. It
cannot be correct reasoning, to rely upon this fact as a
ground to infer that the prohibition must be found in
some provision not having that antithetical character, since
this supposes an intention to insert the prohibition, which
intention can only be assumed. Its omission is a just reason
for forming no other conclusion than that it was purposely
omitted. But,

2. It is insisted, that, though not express, the prohibition
is to be inferred from the grant to Congress to establish
uniform laws on the subject of bankruptcies throughout
the United States; and that this grant, standing in
connexion with that to establish an uniform rule of naturalization,
which is, in its nature, exclusive, must receive a
similar construction.

There are many answers to be given to this argument;
and the first is, that a mere grant of a State power does
not, in itself, necessarily imply an abandonment or relinquishment
of the power granted, or we should be involved
in the absurdity of denying to the States the power of taxation,
and sundry other powers ceded to the general government.
But much less can such a consequence follow
from vesting in the general government a power which no
State possessed, and which, all of them combined, could not
exercise to meet the end proposed in the constitution. For,
if every State in the Union were to pass a bankrupt law in
the same unvarying words, although this would, undoubtedly,
be an uniform system of bankruptcy in its literal sense,
it would be very far from answering the grant to Congress.
There would still need some act of Congress, or some
treaty under sanction of an act of Congress, to give discharges
in one State a full operation in the other. Thus,
then, the inference which we are called upon to make, will
be found not to rest upon any actual cession of State
power, but upon the creation of a new power which no
State ever pretended to possess; a power which, so far
from necessarily diminishing, or imparing the State power
over the subject, might find its full exercise in simply recognising
as valid, in every State, all discharges which shall
be honestly obtained under the existing laws of any State.

Again; the inference proposed to be deduced from
this grant to Congress, will be found much broader than
the principle in which the deduction is claimed. For, in
this, as in many other instances in the constitution, the
grant implies only the right to assume and exercise a power over
the subject. Why, then, should the State powers cease before
Congress shall have acted upon the subject? or why should
that be converted into a present and absolute relinquishment
of power, which is, in its nature, merely potential,
and dependent on the discretion of Congress whether,
and when, to enter on the exercise of a power that may
supersede it?

Let any one turn his eye back to the time when this
grant was made, and say if the situation of the people admitted
of an abandonment of a power so familiar to the
jurisprudence of every State; so universally sustained in its
reasonable exercise, by the opinion and practice of mankind,
and so vitally important to a people overwhelmed in
debt, and urged to enterprise by the activity of mind that
is generated by revolutions and free governments.

I will with confidence affirm, that the constitution had
never been adopted, had it then been imagined that this
question would ever have been made, or that the exercise
of this power in the States should ever have depended
upon the views of the tribunals to which that constitution
was about to give existence. The argument proposed to be
drawn from a comparison of this power with that of Congress
over naturalization, is not a fair one, for the cases
are not parallel; and if they were, it is by no means settled
that the States would have been precluded from this
power, if Congress had not assumed it. But, admitting, argumenti
gratia, that they would, still there are considerations
bearing upon the one power, which have no application
to the other. Our foreign intercourse being exclusively
committed to the general government, it is peculiarly
their province to determine who are entitled to the
privileges of American citizens, and the protection of the
American government. And the citizens of any one State
being entitled by the constitution to enjoy the rights of citizenship
in every other State, that fact creates an interest
in this particular in each other's acts, which does not exist
with regard to their bankrupt laws; since State acts of naturalization
would thus be extra-territorial in their operation,
and have an influence on the most vital interests of other
States.

On these grounds, State laws of naturalization may be
brought under one of the four heads or classes of powers
precluded to the States, to wit: that of incompatibility; and
on this ground alone, if any, could the States be debarred
from exercising this power, had Congress not proceeded
to assume it. There is, therefore, nothing in that argument.

The argument deduced from the commercial character
of bankrupt laws is still more unfortunate. It is but necessary
to follow it out, and the inference, if any, deducible
from it, will be found to be direct and conclusive in favour
of the State rights over this subject. For if, in consideration
of the power vested in Congress over foreign commerce,
and the commerce between the States, it was proper to vest
a power over bankruptcies that should pervade the States;
it would seem, that by leaving the regulation of internal
commerce in the power of the States, it became equally [Volume 3, Page 444]
proper to leave the exercise of this power within their own
limits unimpaired.

With regard to the universal understanding of the
American people on this subject, there cannot be two
opinions. If ever contemporaneous exposition, and the
clear understanding of the contracting parties, or of the
legislating power, (it is no matter in which light it be considered,)
could be resorted to as the means of expounding
an instrument, the continuing and unimpaired existence
of this power in the States ought never to have been controverted.
Nor was it controverted until the repeal of the
bankrupt act of 1800, or until a state of things arose in
which the means of compelling a resort to the exercise of
this power by the United States became a subject of much
interest. Previously to that period, the States remained in
the peaceable exercise of this power, under circumstances
entitled to great consideration. In every State in the Union
was the adoption of the constitution resisted by men of the
keenest and most comprehensive minds; and if an argument,
such as this, so calculated to fasten on the minds of
a people, jealous of State rights, and deeply involved in
debt, could have been imagined, it never would have escaped
them. Yet no where does it appear to have been
thought of; and, after adopting the constitution, in every
part of the Union, we find the very framers of it every
where among the leading men in public life, and legislating
or adjudicating under the most solemn oath to maintain
the constitution of the United States, yet no where
imagining that, in the exercise of this power, they violated
their oaths, or transcended their rights. Every where, too,
the principle was practically acquiesced in, that taking away
the power to pass a law on a particular subject was equivalent to
a repeal of existing laws on that subject. Yet in no instance was
it contended that the bankrupt laws of the States were repealed,
while those on navigation, commerce, the admiralty
jurisdiction, and various others, were at once abandoned
without the formality of a repeal. With regard to
their bankrupt or insolvent laws, they went on carrying
them into effect and abrogating, and re-enacting them,
without a doubt of their full and unimpaired power over
the subject. Finally, when the bankrupt law of 1800 was
enacted, the only power that seemed interested in denying
the right to the States, formally pronounced a full and absolute
recognition of that right. It is impossible for language
to be more full and explicit on the subject, than is
the sixth section of this act of Congress. It acknowledges
both the validity of existing laws, and the right of passing
future laws. The practical construction given by that act to
the constitution is precisely this, that it amounts only to a right
to assume the power to legislate on the subject, and, therefore,
abrogates or suspends the existing laws, only so far as they may
clash with the provisions of the act of Congress. This construction
was universally acquiesced in, for it was that on which
there had previously prevailed but one opinion from the
date of the constitution.

Much alarm has been expressed respecting the inharmonious
operation of so many systems, all operating at the
same time. But I must say that I cannot discover any real
ground for these apprehensions. Nothing but a future operation
is here contended for, and nothing is easier than
to avoid those rocks and quicksands which are visible to
all. Most of the dangers are imaginary, for the interests of
each community, its respect for the opinion of mankind,
and a remnant of moral feeling which will not cease to
operate in the worst of times, will always present important
barriers against the gross violation of principle. How
is the general government itself made up, but of the same
materials which separately make up the governments of
the States?

It is a very important fact, and calculated to dissipate the
fears of those who seriously apprehend danger from this
quarter, that the powers assumed and exercised by the
States over this subject, did not compose any part of the
grounds of complaint by Great Britain, when negotiating
with our government on the subject of violations of the
treaty of peace. Nor is it immaterial as an historical fact, to
show the evils against which the constitution really intended
to provide a remedy. Indeed, it is a solecism to
suppose, that the permanent laws of any government, particularly
those which relate to the administration of justice
between individuals, can be radically unequal or even unwise.
It is scarcely ever so in despotic governments; much
less in those in which the good of the whole is the predominating
principle. The danger to be apprehended, is from
temporary provisions and desultory legislation; and this
seldom has a view to future contracts.

At all events, whatever be the degree of evil to be produced
by such laws, the limits of its action are necessarily
confined to the territory of those who inflict it. The ultimate
object in denying to the States this power, would
seem to be, to give the evil a wider range, if it be one, by
extending the benefit of discharges over the whole of the
Union. But it is impossible to suppose, that the framers of
the constitution could have regarded the exercise of this
power as an evil in the abstract, else they would hardly
have engrafted it upon that instrument which was to become
the great safeguard of public justice and public morals.

And had they been so jealous of the exercise of this
power in the States, it is not credible that they would have
left unimpaired those unquestionable powers over the administration
of justice which the States do exercise, and
which, in their immoral exercise, might leave to the creditor
the mere shadow of justice. The debtor's person, no
one doubts, may be exempted from execution. But there
is high precedent for exempting his lands; and public feeling
would fully sustain an exemption of his slaves. What is
to prevent the extension of exemption, until nothing is left
but the mere mockery of a judgment, without the means
of enforcing its satisfaction?

But it is not only in their execution laws, that the creditor
has been left to the justice and honour of the States
for his security. Every judiciary in the Union owes its existence
to some legislative act; what is to prevent a repeal
of that act? and then, what becomes of his remedy, if he
has not access to the Courts of the Union? Or what is to
prevent the extension of the right to imparl? of the time
to plead? of the interval between the sittings of the State
Courts? Where is the remedy against all this? and why
were not these powers taken also from the States, if they [Volume 3, Page 445]
could not be trusted with the subordinate and incidental
power here denied them? The truth is, the Convention
saw all this, and saw the impossibility of providing an adequate
remedy for such mischiefs, if it was not to be found
ultimately in the wisdom and virtue of the State rulers,
under the salutary control of that republican form of government
which it guarantees to every State. For the foreigner
and the citizens of other States, it provides the safeguard
of a tribunal which cannot be controlled by State
laws in the application of the remedy; and for the protection
of all, was interposed that oath which it requires to be
administered to all the public functionaries, as well of the
States as the United States. It may be called the ruling
principle of the constitution, to interfere as little as possible
between the citizen and his own State government; and
hence, with a few safeguards of a very general nature, the
executive, legislative and judicial functions of the States
are left as they were, as to their own citizens, and as to all
internal concerns. It is not pretended that this discharge
could operate upon the rights of the citizen of any other
State, unless his contract was entered into in the State that
gave it, or unless he had voluntarily submitted himself to
the lex fori of the State before the discharge, in both which
instances he is subjected to its effects by his own voluntary
act.

For these considerations, I pronounce the exclusive
power of Congress over the relief of insolvents untenable,
and the dangers apprehended from the contrary doctrine
unreal.

We will next inquire whether the States are precluded
from the exercise of this power by that clause in the constitution,
which declares that no State shall "pass any bill
of attainder, ex post facto law, or law impairing the obligation
of contracts."

This law of the State of New-York is supposed to have
violated the obligation of a contract, by releasing Ogden
from a debt which he had not satisfied; and the decision
turns upon the question, first, in what consists the obligation
of a contract? and, secondly, whether the act of New-York
will amount to a violation of that obligation, in the
sense of the constitution.

The first of these questions has been so often examined
and considered in this and other Courts of the United
States, and so little progress has yet been made in fixing
the precise meaning of the words "obligation of a contract,"
that I should turn in despair from the inquiry, were
I not convinced that the difficulties the question presents
are mostly factitious, and the result of refinement and
technicality; or of attempts at definition made in terms defective
both in precision and comprehensiveness. Right or
wrong, I come to my conclusion on their meaning, as applied
to executory contracts, the subject now before us, by
a simple and short-handed exposition.

Right and obligation are considered by all ethical writers
as correlative terms: Whatever I by my contract give another
a right to require of me, I by that act lay myself
under an obligation to yield or bestow. The obligation of
every contract will then consist of that right or power over
my will or actions, which I, by my contract, confer on another.
And that right and power will be found to be measured
neither by moral law alone, nor universal law alone,
nor by the laws of society alone, but by a combination of
the three,--an operation in which the moral law is explained
and applied by the law of nature, and both modified
and adapted to the exigencies of society by positive
law. The constitution was framed for society, and an advanced
state of society, in which I will undertake to say
that all the contracts of men receive a relative, and not a
positive interpretation: for the rights of all must be held
and enjoyed in subserviency to the good of the whole. The
State construes them, the State applies them, the State
controls them, and the State decides how far the social exercise
of the rights they give us over each other can be
justly asserted. I say the social exercise of these rights, because
in a state of nature, they are asserted over a fellow
creature, but in a state of society, over a fellow citizen. Yet,
it is worthy of observation, how closely the analogy is preserved
between the assertion of these rights in a state of
nature and a state of society, in their application to the
class of contracts under consideration.

Two men, A. and B., having no previous connexion with
each other, (we may suppose them even of hostile nations,)
are thrown upon a desert island. The first, having had the
good fortune to procure food, bestows a part of it upon
the other, and he contracts to return an equivalent in kind.
It is obvious here, that B. subjects himself to something
more than the moral obligation of his contract, and that
the law of nature, and the sense of mankind, would justify
A. in resorting to any means in his power to compel a
compliance with this contract. But if it should appear that
B., by sickness, by accident, or circumstances beyond human
control, however superinduced, could not possibly
comply with his contract, the decision would be otherwise,
and the exercise of compulsory power over B. would be
followed with the indignation of mankind. He has carried
the power conferred on him over the will or actions of
another beyond their legitimate extent, and done injustice
in his turn. "Summum jus est summa injuria."

The progress of parties, from the initiation to the consummation
of their rights, is exactly parallel to this in a
state of society. With this difference, that in the concoction
of their contracts, they are controlled by the laws of the
society of which they are members; and for the construction
and enforcement of their contracts, they rest upon the
functionaries of its government. They can enter into no
contract which the laws of that community forbid, and the
validity and effect of their contracts is what the existing
laws give to them. The remedy is no longer retained in
their own hands, but surrendered to the community, to a
power competent to do justice, and bound to discharge
towards them the acknowledged duties of government to
society, according to received principles of equal justice.
The public duty, in this respect, is the substitute for that
right which they possessed in a state of nature, to enforce
the fulfilment of contracts; and if, even in a state of nature,
limits were prescribed by the reason and nature of
things, to the exercise of individual power in enacting the
fulfilment of contracts, much more will they be in a state
of society. For it is among the duties of society to enforce
the rights of humanity; and both the debtor and the society [Volume 3, Page 446]
have their interests in the administration of justice, and
in the general good; interests which must not be swallowed
up and lost sight of while yielding attention to the claim of
the creditor. The debtor may plead the visitations of Providence,
and the society has an interest in preserving every
member of the community from despondency--in relieving
him from a hopeless state of prostration, in which he
would be useless to himself, his family, and the community.
When that state of things has arrived in which the
community has fairly and fully discharged its duties to the
creditor, and in which, pursuing the debtor any longer
would destroy the one, without benefitting the other, must
always be a question to be determined by the common
guardian of the rights of both; and in this originates the
power exercised by governments in favour of insolvents.
It grows out of the administration of justice, and is a necessary
appendage to it.

There was a time when a different idea prevailed, and
then it was supposed that the rights of the creditor required
the sale of the debtor, and his family. A similar
notion now prevails on the coast of Africa, and is often
exercised there by brute force. It is worthy only of the
country in which it now exists, and of that state of society
in which it once originated and prevailed.

"Lex non cogit ad impossibilia," is a maxim applied by law
to the contracts of parties in a hundred ways. And where
is the objection, in a moral or political view, to applying it
to the exercise of the power to relieve insolvents? It is in
analogy with this maxim, that the power to relieve them is
exercised; and if it never was imagined, that, in other
cases, this maxim violated the obligation of contracts, I see
no reason why the fair, ordinary, and reasonable exercise
of it in this instance, should be subjected to that imputation.

If it be objected to these views of the subject, that they
are as applicable to contracts prior to the law, as to those
posterior to it, and, therefore, inconsistent with the decision
in the case of Sturges v. Crowninshield, my reply is, that
I think this no objection to its correctness. I entertained
this opinion then, and have seen no reason to doubt it
since. But if applicable to the case of prior debts, multo
fortiori, will it be so to those contracted subsequent to such
a law; the posterior date of the contract removes all doubt
of its being in the fair and unexceptionable administration
of justice that the discharge is awarded.

I must not be understood here, as reasoning upon the
assumption that the remedy is grafted into the contract. I
hold the doctrine untenable, and infinitely more restrictive
on State power than the doctrine contended for by the
opposite party. Since, if the remedy enters into the contract,
then the States lose all power to alter their laws for
the administration of justice. Yet, I freely admit, that the
remedy enters into the views of the parties when contracting;
that the constitution pledges the States to every creditor
for the full, and fair, and candid exercise of State
power to the ends of justice, according to its ordinary administration,
uninfluenced by views to lighten, or lessen,
or defer the obligation to which each contract fairly and
legally subjects the individual who enters into it. Whenever
an individual enters into a contract, I think his assent is to
be inferred, to abide by those rules in the administration
of justice which belong to the jurisprudence of the country
of the contract. And when compelled to pursue his debtor
in other States, he is equally bound to acquiesce in the law
of the forum to which he subjects himself. The law of the
contract remains the same every where, and it will be the
same in every tribunal; but the remedy necessarily varies,
and with it the effect of the constitutional pledge, which
can only have relation to the laws of distributive justice
known to the policy of each State severally. It is very true,
that inconveniences may occasionally grow out of irregularities
in the administration of justice by the States. But
the citizen of the same State is referred to his influence
over his own institutions for his security, and the citizens
of the other States have the institutions and powers of the
general government to resort to. And this is all the security
the constitution ever intended to hold out against the undue
exercise of the power of the States over their own contracts,
and their own jurisprudence.

But, since a knowledge of the laws, policy, and jurisprudence
of a State, is necessarily imputed to every one
entering into contracts within its jurisdiction, of what surprise
can he complain, or what violation of public faith,
who still enters into contracts under that knowledge? It is
no reply to urge, that, at the same time knowing of the
constitution, he had a right to suppose the discharge void
and inoperative, since this would be but speculating on a
legal opinion, in which, if he proves mistaken, he has still
nothing to complain of but his own temerity, and concerning
which, all that come after this decision, at least, cannot
complain of being misled by their ignorance or misapprehensions.
Their knowledge of the existing laws of the State
will henceforward be unqualified, and was so, in the view
of the law, before this decision was made.

It is now about twelve or fourteen years since I was
called upon, on my circuit, in the case of Gell, Canonge &
Co. v. L. Jacobs, to review all this doctrine. The cause was
ably argued by gentlemen whose talents are well known in
this capitol, and the opinions which I then formed, I have
seen no reason since to distrust.

It appears to me, that a great part of the difficulties of
the cause, arise from not giving sufficient weight to the
general intent of this clause in the constitution, and subjecting
it to a severe literal construction, which would be
better adapted to special pleadings.

By classing bills of attainder, ex post facto laws, and laws
impairing the obligation of contracts together, the general
intent becomes very apparent; it is a general provision
against arbitrary and tyrannical legislation over existing
rights, whether of person or property. It is true, that some
confusion has arisen from an opinion, which seems early,
and without due examination, to have found its way into
this Court; that the phrase "ex post facto," was confined to
laws affecting criminal acts alone. The fact, upon examination,
will be found otherwise; for neither in its signification
or uses is it thus restricted. It applies to civil as well
as to criminal acts, (1 Shep. Touch. 68. 70, 73.) and with this
enlarged signification attached to that phrase, the purport
of the clause would be, "that the States shall pass no law,
attaching to the acts of individuals other effects or consequences [Volume 3, Page 447]
than those attached to them by the laws existing at their date; and
all contracts thus construed, shall be enforced according to their
just and reasonable purport."

But to assign to contracts, universally, a literal purport,
and to exact for them a rigid literal fulfilment, could not
have been the intent of the constitution. It is repelled by a
hundred examples. Societies exercise a positive control as
well over the inception, construction, and fulfilment of
contracts, as over the form and measure of the remedy to
enforce them.

As instances of the first, take the contract imputed to the
drawer of a bill, or endorser of a note, with its modifications;
the deviations of the law from the literal contract of
the parties to a penal bond, a mortgage, a policy of insurance,
bottomry bond, and various others that might be
enumerated. And for instances of discretion exercised in
applying the remedy, take the time for which executors
are exempted from suit; the exemption of members of
legislatures; of judges; of persons attending Courts, or
going to elections; the preferences given in the marshalling
of assets; sales on credit for a present debt; shutting of
Courts altogether against gaming debts and usurious contracts,
and above all, acts of limitation. I hold it impossible
to maintain the constitutionality of an act of limitation, if
the modification of the remedy against debtors, implied in
the discharge of insolvents, is unconstitutional. I have seen
no distinction between the cases that can bear examination.

It is in vain to say that acts of limitation appertain to the
remedy only: both descriptions of laws appertain to the
remedy, and exactly in the same way; they put a period to
the remedy, and upon the same terms, by what has been
called, a tender of paper money in the form of a plea, and to
the advantage of the insolvent laws, since if the debtor can
pay, he has been made to pay. But the door of justice is
shut in the face of the creditor in the other instance, without
an inquiry on the subject of the debtor's capacity to
pay. And it is equally vain to say, that the act of limitation
raises a presumption of payment, since it cannot be taken
advantage of on the general issue, without provision by
statute; and the only legal form of a plea implies an acknowledgment
that the debt has not been paid.

Yet so universal is the assent of mankind in favour of
limitation acts, that it is the opinion of profound politicians,
that no nation could subsist without one.

The right, then, of the creditor, to the aid of the public
arm for the recovery of contracts, is not absolute and unlimited,
but may be modified by the necessities or policy of
societies. And this, together with the contract itself, must
be taken by the individual, subject to such restrictions and
conditions as are imposed by the laws of the country. The
right to pass bankrupt laws is asserted by every civilized
nation in the world. And in no writer, I will venture to
say, has it ever been suggested, that the power of annulling
such contracts, universally exercised under their
bankrupt or insolvent systems, involves a violation of the
obligation of contracts. In international law, the subject is
perfectly understood, and the right generally acquiesced
in; and yet the denial of justice is, by the same code, an
acknowledged cause of war.

But it is contended, that if the obligation of a contract
has relation at all to the laws which give or modify the
remedy, then the obligation of a contract is ambulatory,
and uncertain, and will mean a different thing in every
State in which it may be necessary to enforce the contract.

There is no question that this effect follows; and yet,
after this concession, it will still remain to be shown how
any violation of the obligation of the contract can arise
from that cause. It is a casualty well known to the creditor
when he enters into the contract; and if obliged to prosecute
his rights in another State, what more can he claim of
that State, than that its Courts shall be open to him on the
same terms on which they are open to other individuals?
It is only by voluntarily subjecting himself to the lex fori of
a State, that he can be brought within the provisions of its
statutes in favour of debtors, since, in no other instance,
does any State pretend to a right to discharge the contracts
entered into in another State. He who enters into a pecuniary
contract, knowing that he may have to pursue his
debtor, if he flees from justice, casts himself, in fact, upon
the justice of nations.

It has also been urged, with an earnestness that could
only proceed from deep conviction, that insolvent laws
were tender laws of the worst description, and that it is
impossible to maintain the constitutionality of insolvent
laws that have a future operation, without asserting the
right of the States to pass tender laws, provided such laws
are confined to a future operation.

Yet to all this there appears to be a simple and conclusive
answer. The prohibition in the constitution to make
any thing but gold or silver coin a tender in payment of
debts is express and universal. The framers of the constitution
regarded it as an evil to be repelled without modification;
they have, therefore, left nothing to be inferred
or deduced from construction on this subject. But the contrary
is the fact with regard to insolvent laws; it contains
no express prohibition to pass such laws, and we are called
upon here to deduce such a prohibition from a clause,
which is any thing but explicit, and which already has been
judicially declared to embrace a great variety of other subjects.
The inquiry, then, is open and indispensable in relation
to insolvent laws, prospective or retrospective,
whether they do, in the sense of the constitution, violate
the obligation of contracts? There would be much in the
argument, if there was no express prohibition against
passing tender laws; but with such express prohibition, the
cases have no analogy. And, independent of the different
provisions in the constitution, there is a distinction existing
between tender laws and insolvent laws in their object and
policy, which sufficiently points out the principle upon
which the constitution acts upon them as several and distinct;
a tender law supposes a capacity in the debtor to pay
and satisfy the debt in some way, but the discharge of an
insolvent is founded in his incapacity ever to pay, which
incapacity is judicially determined according to the laws of
the State that passes it. The one imports a positive violation
of the contract, since all contracts to pay, not expressed
otherwise, have relation to payment in the current
coin of the country; the other imports an impossibility that
the creditor ever can fulfil the contract.

[Volume 3, Page 448]

If it be urged, that to assume this impossibility is itself
an arbitrary act, that parties have in view something more
than present possessions, that they look to future acquisitions,
that industry, talents and integrity are as confidently
trusted as property itself; and, to release them from this
liability, impairs the obligation of contracts; plausible as
the argument may seem, I think the answer is obvious and
incontrovertible.

Why may not the community set bounds to the will of
the contracting parties in this as in every other instance?
That will is controlled in the instances of gaming debts,
usurious contracts, marriage, brokage bonds, and various
others; and why may not the community also declare that,
"look to what you will, no contract formed within the territory
which we govern shall be valid as against future acquisitions;"
"we have an interest in the happiness, and services,
and families of this community, which shall not be
superseded by individual views?" Who can doubt the
power of the State to prohibit her citizens from running
in debt altogether? A measure a thousand times wiser than
that impulse to speculation and ruin, which has hitherto
been communicated to individuals by our public policy.
And if to be prohibited altogether, where is the limit which
may not be set both to the acts and the views of the contracting
parties?

When considering the first question in this cause, I took
occasion to remark on the evidence of contemporaneous
exposition deducible from well known facts. Every candid
mind will admit that this is a very different thing from
contending that the frequent repetition of wrong will create
a right. It proceeds upon the presumption, that the
contemporaries of the constitution have claims to our deference
on the question of right, because they had the best
opportunities of informing themselves of the understanding
of the framers of the constitution, and of the sense put
upon it by the people when it was adopted by them; and
in this point of view it is obvious that the consideration
bears as strongly upon the second point in the cause as on
the first. For, had there been any possible ground to think
otherwise, who could suppose that such men, and so many
of them, acting under the most solemn oath, and generally
acting rather under a feeling of jealousy of the power of
the general government than otherwise, would universally
have acted upon the conviction, that the power to relieve
insolvents by a discharge from the debt had not been
taken from the States by the article prohibiting the violation
of contracts? The whole history of the times, up to a
time subsequent to the repeal of the bankrupt law, indicates
a settled knowledge of the contrary.

If it be objected to the views which I have taken of this
subject, that they imply a departure from the direct and
literal meaning of terms, in order to substitute an artificial
or complicated exposition; my reply is, that the error is on
the other side; qui haeret in literâ, haeret in cortice. All the
notions of society, particularly in their jurisprudence, are
more or less artificial; our constitution no where speaks
the language of men in a state of nature; let any one attempt
a literal exposition of the phrase which immediately
precedes the one under consideration, I mean "ex post
facto," and he will soon acknowledge a failure. Or let him
reflect on the mysteries that hang around the little slip of
paper which lawyers know by the title of a bail-piece. The
truth is, that even compared with the principles of natural
law, scarcely any contract imposes an obligation conformable
to the literal meaning of terms. He who enters into a
contract to follow the plough for the year, is not held to
its literal performance, since many casualties may intervene
which would release him from the obligation without
actual performance. There is a very striking illustration of
this principle to be found in many instances in the books;
I mean those cases in which parties are released from their
contracts by a declaration of war, or where laws are passed
rendering that unlawful, even incidentally, which was lawful
at the time of the contract. Now, in both these instances,
it is the government that puts an end to the contract,
and yet no one ever imagined that it thereby violates
the obligation of a contract.

It is, therefore, far from being true, as a general proposition,
"that a government necessarily violates the obligation
of a contract, which it puts an end to without performance."
It is the motive, the policy, the object, that must
characterize the legislative act, to affect it with imputation
of violating the obligation of contracts.

In the effort to get rid of the universal vote of mankind
in favour of limitation acts, and laws against gaming,
usury, marriage, brokage, buying and selling of offices,
and many of the same description, we have heard it argued,
that, as to limitation acts, the creditor has nothing to
complain of, because time is allowed him, of which, if he
does not avail himself, it is his own neglect; and as to all
others, there is no contract violated, because there was none
ever incurred. But it is obvious that this mode of answering
the argument involves a surrender to us of our whole
ground. It admits the right of the government to limit and
define the power of contracting, and the extent of the
creditor's remedy against his debtor; to regard other rights
besides his, and to modify his rights so as not to let them
override entirely the general interests of society, the interests
of the community itself in the talents and services of
the debtor, the regard due to his happiness, and to the
claims of his family upon him and upon the government.

No one questions the duty of the government to protect
and enforce the just rights of every individual over all
within its control. What we contend for is no more than
this, that it is equally the duty and right of governments to
impose limits to the avarice and tyranny of individuals, so
as not to suffer oppression to be exercised under the semblance
of right and justice. It is true, that in the exercise
of this power, governments themselves may sometimes be
the authors of oppression and injustice; but, wherever the
constitution could impose limits to such power, it has done
so; and if it has not been able to impose effectual and universal
restraints, it arises only from the extreme difficulty
of regulating the movements of sovereign power; and the
absolute necessity, after every effort that can be made to
govern effectually, that will, still exist to leave some space
for the exercise of discretion, and the influence of justice
and wisdom.

[Volume 3, Page 449]

Mr. Justice Thompson. . . .

Mr. Chief Justice Marshall. It is well known that the
Court has been divided in opinion on this case. Three
Judges, Mr. Justice Duvall, Mr. Justice Story, and myself,
do not concur in the judgment which has been pronounced.
We have taken a different view of the very interesting
question which has been discussed with so much
talent, as well as labour, at the bar, and I am directed to
state the course of reasoning on which we have formed the
opinion that the discharge pleaded by the defendant is no
bar to the action.

The single question for consideration, is, whether the
act of the State of New-York is consistent with or repugnant
to the constitution of the United States?

This Court has so often expressed the sentiments of
profound and respectful reverence with which it approaches
questions of this character, as to make it unnecessary
now to say more than that, if it be right that the
power of preserving the constitution from legislative infraction,
should reside any where, it cannot be wrong, it
must be right, that those whom the delicate and important
duty is conferred should perform it according to their best
judgment.

Much, too, has been said concerning the principles of
construction which ought to be applied to the constitution
of the United States.

On this subject, also, the Court has taken such frequent
occasion to declare its opinion, as to make it unnecessary,
at least, to enter again into an elaborate discussion of it.
To say that the intention of the instrument must prevail;
that this intention must be collected from its words; that
its words are to be understood in that sense in which they
are generally used by those for whom the instrument was
intended; that its provisions are neither to be restricted
into insignificance, nor extended to objects not comprehended
in them, nor contemplated by its framers;--is to
repeat what has been already said more at large, and is all
that can be necessary.

As preliminary to a more particular investigation of the
clause in the constitution, on which the case now under
consideration is supposed to depend, it may be proper to
inquire how far it is affected by the former decisions of
this Court.

In Sturges v. Crowninshield, it was determined, that an act
which discharged the debtor from a contract entered into
previous to its passage, was repugnant to the constitution.
The reasoning which conducted the Court to that conclusion
might, perhaps, conduct it farther; and with that reasoning,
(for myself alone this expression is used,) I have
never yet seen cause to be dissatisfied. But that decision is
not supposed to be a precedent for Ogden v. Saunders, because
the two cases differ from each other in a material
fact; and it is a general rule, expressly recognised by the
Court in Sturges v. Crowninshield, that the positive authority
of a decision is co-extensive only with the facts on which
it is made. In Sturges v. Crowninshield, the law acted on a
contract which was made before its passage; in this case,
the contract was entered into after the passage of the law.

In M'Neil v. M'Millan, the contract, though subsequent
to the passage of the act, was made in a different State, by
persons residing in that State, and, consequently, without
any view to the law, the benefit of which was claimed by
the debtor.

The Farmers' and Mechanics' Bank of Pennsylvania v. Smith
differed from Sturges v. Crowninshield only in this, that the
plaintiff and defendant were both residents of the State in
which the law was enacted, and in which it was applied.
The Court was of opinion that this difference was unimportant.

It has then been decided, that an act which discharges
the debtor from pre-existing contracts is void; and that an
act which operates on future contracts is inapplicable to a
contract made in a different State, at whatever time it may
have been entered into.

Neither of these decisions comprehends the question
now presented to the Court. It is, consequently, open for
discussion.

The provision of the constitution is, that "no State shall
pass any law" "impairing the obligation of contracts." The
plaintiff in error contends that this provision inhibits the
passage of retrospective laws only--of such as act on contracts
in existence at their passage. The defendant in error
maintains that it comprehends all future laws, whether
prospective or retrospective, and withdraws every contract
from State legislation, the obligation of which has become
complete.

That there is an essential difference in principle between
laws which act on past, and those which act on future
contracts; that those of the first description can seldom
be justified, while those of the last are proper subjects
of ordinary legislative discretion, must be admitted. A constitutional
restriction, therefore, on the power to pass laws
of the one class, may very well consist with entire legislative
freedom respecting those of the other. Yet, when we
consider the nature of our Union; that it is intended to
make us, in a great measure, one people, as to commercial
objects; that, so far as respects the intercommunication of
individuals, the lines of separation between States are, in
many respects, obliterated; it would not be matter of surprise,
if, on the delicate subject of contracts once formed,
the interference of State legislation should be greatly
abridged, or entirely forbidden. In the nature of the provision,
then, there seems to be nothing which ought to influence
our construction of the words; and, in making that
construction, the whole clause, which consists of a single
sentence, is to be taken together, and the intention is to be
collected from the whole.

The first paragraph of the tenth section of the first article,
which comprehends the provision under consideration,
contains an enumeration of those cases in which the
action of the State legislature is entirely prohibited. The
second enumerates those in which the prohibition is modified.
The first paragraph, consisting of total prohibitions,
comprehends two classes of powers. Those of the first are
political and general in their nature, being an exercise of
sovereignty without affecting the rights of individuals.
These are, the powers "to enter into any treaty, alliance,
[Volume 3, Page 450]
or confederation; grant letters of marque or reprisal, coin
money, emit bills of credit."

The second class of prohibited laws comprehends those
whose operation consists in their action on individuals.
These are, laws which make any thing but gold and silver
coin a tender in payment of debts, bills of attainder, ex post
facto laws, or laws impairing the obligation of contracts, or
which grant any title of nobility.

In all these cases, whether the thing prohibited be the
exercise of mere political power, or legislative action on
individuals, the prohibition is complete and total. There is
no exception from it. Legislation of every description is
comprehended within it. A State is as entirely forbidden
to pass laws impairing the obligation of contracts, as to
make treaties, or coin money. The question recurs, what is
a law impairing the obligation of contracts?

In solving this question, all the acumen which controversy
can give to the human mind, has been employed in
scanning the whole sentence, and every word of it. Arguments
have been drawn from the context, and from the
particular terms in which the prohibition is expressed, for
the purpose, on the one part, of showing its application to
all laws which act upon contracts, whether prospectively or
retrospectively; and, on the other, of limiting it to laws
which act on contracts previously formed.

The first impression which the words make on the mind,
would probably be, that the prohibition was intended to be
general. A contract is commonly understood to be the
agreement of the parties; and, if it be not illegal, to bind
them to the extent of their stipulations. It requires reflection,
it requires some intellectual effort, to efface this
impression, and to come to the conclusion, that the words
contract and obligation, as used in the constitution, are not
used in this sense. If, however, the result of this mental
effort, fairly made, be the correction of this impression, it
ought to be corrected.

So much of this prohibition as restrains the power of the
States to punish offenders in criminal cases, the prohibition
to pass bills of attainder and ex post facto laws, is, in its
very terms, confined to pre-existing cases. A bill of attainder
can be only for crimes already committed; and a law
is not ex post facto, unless it looks back to an act done before
its passage. Language is incapable of expressing, in
plainer terms, that the mind of the Convention was directed
to retroactive legislation. The thing forbidden is retroaction.
But that part of the clause which relates to the
civil transactions of individuals, is expressed in more general
terms; in terms which comprehend, in their ordinary
signification, cases which occur after, as well as those which
occur before, the passage of the act. It forbids a State to
make any thing but gold and silver coin a tender in payment
of debts, or to pass any law impairing the obligation
of contracts. These prohibitions relate to kindred subjects.
They contemplate legislative interference with private
rights, and restrain that interference. In construing that
part of the clause which respects tender laws, a distinction
has never been attempted between debts existing at the
time the law may be passed, and debts afterwards created.
The prohibition has been considered as total; and yet the
difference in principle between making property a tender
in payment of debts, contracted after the passage of the
act, and discharging those debts without payment, or by
the surrender of property, between an absolute right to
tender in payment, and a contingent right to tender in
payment, or in discharge of the debt, is not clearly discernible.
Nor is the difference in language so obvious, as to
denote plainly a difference of intention in the framers of
the instrument. "No State shall make any thing but gold
and silver coin a tender in payment of debts." Does the
word "debts" mean, generally, those due when the law applies
to the case, or is it limited to debts due at the passage
of the act? The same train of reasoning which would confine
the subsequent words to contracts existing at the passage
of the law, would go far in confining these words to
debts existing at that time. Yet, this distinction has never,
we believe, occurred to any person. How soon it may occur
is not for us to determine. We think it would, unquestionably,
defeat the object of the clause.

The counsel for the plaintiff insist, that the word "impairing,"
in the present tense, limits the signification of the
provision to the operation of the act at the time of its passage;
that no law can be accurately said to impair the obligation
of contracts, unless the contracts exist at the time.
The law cannot impair what does not exist. It cannot act
on nonentities.

There might be weight in this argument, if the prohibited
laws were such only as operated of themselves, and
immediately on the contract. But insolvent laws are to operate
on a future, contingent, unforeseen event. The time
to which the word "impairing" applies, is not the time of
the passage of the act, but of its action on the contract.
That is, the time present in contemplation of the prohibition.
The law, at its passage, has no effect whatever on the
contract. Thus, if a note be given in New-York for the
payment of money, and the debtor removes out of that
State into Connecticut, and becomes insolvent, it is not
pretended that his debt can be discharged by the law of
New-York. Consequently, that law did not operate on the
contract at its formation. When, then, does its operation
commence? We answer, when it is applied to the contract.
Then, if ever, and not till then, it acts on the contract, and
becomes a law impairing its obligation. Were its constitutionality,
with respect to previous contracts, to be admitted,
it would not impair their obligation until an insolvency
should take place, and a certificate of discharge be
granted. Till these events occur, its impairing faculty is
suspended. A law, then, of this description, if it derogates
from the obligation of a contract, when applied to it, is
grammatically speaking, as much a law impairing that obligation,
though made previous to its formation, as if made
subsequently.

A question of more difficulty has been pressed with
great earnestness. It is, what is the original obligation of a
contract, made after the passage of such an act as the insolvent
law of New-York? Is it unconditional to perform
the very thing stipulated, or is the condition implied, that,
in the event of insolvency, the contract shall be satisfied by
the surrender of property? The original obligation, whatever
that may be, must be preserved by the constitution.
Any law which lessens, must impair it.

[Volume 3, Page 451]

All admit, that the constitution refers to, and preserves,
the legal, not the moral obligation of a contract. Obligations
purely moral, are to be enforced by the operation of
internal and invisible agents, not by the agency of human
laws. The restraints imposed on States by the constitution,
are intended for those objects which would, if not restrained,
be the subject of State legislation. What, then,
was the original legal obligation of the contract now under
the consideration of the Court?

The plaintiff insists, that the law enters into the contract
so completely as to become a constituent part of it. That it
is to be construed as if it contained an express stipulation
to be discharged, should the debtor become insolvent, by
the surrender of all his property for the benefit of his
creditors, in pursuance of the act of the legislature.

This is, unquestionably, pressing the argument very far;
and the establishment of the principle leads inevitably to
consequences which would affect society deeply and seriously.

Had an express condition been inserted in the contract,
declaring that the debtor might be discharged from it at
any time by surrendering all his property to his creditors,
this condition would have bound the creditor. It would
have constituted the obligation of his contract; and a legislative
act annulling the condition would impair the contract.
Such an act would, as is admitted by all, be unconstitutional,
because it operates on pre-existing agreements. If
a law authorizing debtors to discharge themselves from
their debts by surrendering their property, enters into the
contract, and forms a part of it, if it is equivalent to a stipulation
between the parties, no repeal of the law can affect
contracts made during its existence. The effort to give it
that effect would impair their obligation. The counsel for
the plaintiff perceive, and avow this consequence, in effect,
when they contend, that to deny the operation of the
law on the contract under consideration, is to impair its
obligation. Are gentlemen prepared to say, that an insolvent
law, once enacted, must, to a considerable extent, be
permanent? That the legislature is incapable of varying it
so far as respects existing contracts?

So, too, if one of the conditions of an obligation for the
payment of money be, that on the insolvency of the obligor,
or on any event agreed on by the parties, he should
be at liberty to discharge it by the tender of all, or part of
his property, no question could exist respecting the validity
of the contract, or respecting its security from legislative
interference. If it should be determined, that a law
authorizing the same tender, on the same contingency, enters
into, and forms a part of the contract, then, a tender
law, though expressly forbidden, with an obvious view to
its prospective, as well as retrospective operation, would,
by becoming the contract of the parties, subject all contracts
made after its passage to its control. If it be said, that
such a law would be obviously unconstitutional and void,
and, therefore, could not be a constituent part of the contract,
we answer, that if the insolvent law be unconstitutional,
it is equally void, and equally incapable of becoming,
by mere implication, a part of the the contract. The
plainness of the repugnancy does not change the question.
That may be very clear to one intellect, which is far from
being so to another. The law now under consideration is,
in the opinion of one party, clearly consistent with the constitution,
and, in the opinion of the other, as clearly repugnant
to it. We do not admit the correctness of that reasoning
which would settle this question by introducing into
the contract a stipulation not admitted by the parties.

This idea admits of being pressed still farther. If one law
enters into all subsequent contracts, so does every other
law which relates to the subject. A legislative act, then, declaring
that all contracts should be subject to legislative
control, and should be discharged as the legislature might
prescribe, would become a component part of every contract,
and be one of its conditions. Thus, one of the most
important features in the constitution of the United States,
one which the state of the times most urgently required,
one on which the good and the wise reposed confidently
for securing the prosperity and harmony of our citizens,
would lie prostrate, and be construed into an inanimate,
inoperative, unmeaning clause.

Gentlemen are struck with the enormity of this result,
and deny that their principle leads to it. They distinguish,
or attempt to distinguish, between the incorporation of a
general law, such as has been stated, and the incorporation
of a particular law, such as the insolvent law of New-York,
into the contract. But will reason sustain this distinction?
They say, that men cannot be supposed to agree to so indefinite
an article as such a general law would be, but may
well be supposed to agree to an article, reasonable in itself,
and the full extent of which is understood.

But the principle contended for does not make the insertion
of this new term or condition into the contract, to
depend upon its reasonableness. It is inserted because the
legislature has so enacted. If the enactment of the legislature
becomes a condition of the contract because it is an
enactment, then it is a high prerogative, indeed, to decide,
that one enactment shall enter the contract, while another,
proceeding from the same authority, shall be excluded
from it.

The counsel for the plaintiff illustrates and supports this
position by several legal principles, and by some decisions
of this Court, which have been relied on as being applicable
to it.

The first case put is, interest on a bond payable on demand,
which does not stipulate interest. This, he says, is
not a part of the remedy, but a new term in the contract.

Let the correctness of this averment be tried by the
course of proceeding in such cases.

The failure to pay, according to stipulation, is a breach
of the contract, and the means used to enforce it constitute
the remedy which society affords the injured party. If the
obligation contains a penalty, this remedy is universally so
regulated that the judgment shall be entered for the penalty,
to be discharged by the payment of the principal and
interest. But the case on which counsel has reasoned is a
single bill. In this case, the party who has broken his contract
is liable for damages. The proceeding to obtain those
damages is as much a part of the remedy as the proceeding
to obtain the debt. They are claimed in the same declaration,
and as being distinct from each other. The damages
must be assessed by a jury; whereas, if interest
[Volume 3, Page 452]
formed a part of the debt, it would be recovered as part
of it. The declaration would claim it as a part of the debt;
and yet, if a suitor were to declare on such a bond as containing
this new term for the payment of interest, he
would not be permitted to give a bond in evidence in
which this supposed term was not written. Any law regulating
the proceedings of Courts on this subject, would be
a law regulating the remedy.

The liability of the drawer of a bill of exchange, stands
upon the same principle with every other implied contract.
He has received the money of the person in whose favour
the bill is drawn, and promises that it shall be returned by
the drawee. If the drawee fail to pay the bill, then the
promise of the drawer is broken, and for this breach of
contract he is liable. The same principle applies to the endorser.
His contract is not written, but his name is evidence
of his promise that the bill shall be paid, and of his
having received value for it. He is, in effect, a new drawer,
and has made a new contract. The law does not require
that this contract shall be in writing; and, in determining
what evidence shall be sufficient to prove it, does not introduce
new conditions not actually made by the parties.
The same reasoning applies to the principle which requires
notice. The original contract is not written at large.
It is founded on the acts of the parties, and its extent is
measured by those acts. A. draws on B. in favour of C.,
for value received. The bill is evidence that he has received
value, and has promised that it shall be paid. He has funds
in the hands of the drawer, and has a right to expect that
his promise will be performed. He has, also, a right to expect
notice of its non-performance, because his conduct
may be materially influenced by this failure of the drawee.
He ought to have notice that his bill is disgraced, because
this notice enables him to take measures for his own security.
It is reasonable that he should stipulate for this notice,
and the law presumes that he did stipulate for it.

A great mass of human transactions depends upon implied
contracts; upon contracts which are not written, but
which grow out of the acts of the parties. In such cases,
the parties are supposed to have made those stipulations,
which, as honest, fair, and just men, they ought to have
made. When the law assumes that they have made these
stipulations, it does not vary their contract, or introduce
new terms into it, but declares that certain acts, unexplained
by compact, impose certain duties, and that the
parties had stipulated for their performance. The difference
is obvious between this and the introduction of a new
condition into a contract drawn out in writing, in which
the parties have expressed every thing that is to be done
by either.

The usage of banks, by which days of grace are allowed
on notes payable and negotiable in bank, is of the same
character. Days of grace, from their very term, originate
partly in convenience, and partly in the indulgence of the
creditor. By the terms of the note, the debtor has to the
last hour of the day on which it becomes payable, to comply
with it; and it would often be inconvenient to take any
steps after the close of day. It is often convenient to postpone
subsequent proceedings till the next day. Usage has
extended this time of grace generally to three days, and in
some banks to four. This usage is made a part of the contract,
not by the interference of the legislature, but by the
act of the parties. The case cited from 9 Wheat. Rep. 581.
is a note discounted in bank. In all such cases the bank
receives, and the maker of the note pays, interest for the
days of grace. This would be illegal and usurious, if the
money was not lent for these additional days. The extent
of the loan, therefore, is regulated by the act of the parties,
and this part of the contract is founded on their act.
Since, by contract, the maker is not liable for his note until
the days of grace are expired, he has not broken his contract
until they expire. The duty of giving notice to the
endorser of his failure, does not arise, until the failure has
taken place; and, consequently, the promise of the bank to
give such notice is performed, if it be given when the event
has happened.

The case of the Bank of Columbia v. Oakley, (4 Wheat.
Rep. 235.) was one in which the legislature had given a
summary remedy to the bank for a broken contract, and
had placed that remedy in the hands of the bank itself.
The case did not turn on the question whether the law of
Maryland was introduced into the contract, but whether a
party might not, by his own conduct, renounce his claim
to the trial by jury in a particular case. The Court likened
it to submissions to arbitration, and to stipulation and
forthcoming bonds. The principle settled in that case is,
that a party may renounce a benefit, and that Oakley had
exercised this right.

The cases from Strange and East turn upon a principle,
which is generally recognised, but which is entirely distinct
from that which they are cited to support. It is, that a man
who is discharged by the tribunals of his own country, acting
under its laws, may plead that discharge in any other
country. The principle is, that laws act upon a contract,
not that they enter into it, and become a stipulation of the
parties. Society affords a remedy for breaches of contract.
If that remedy has been applied, the claim to it is extinguished.
The external action of law upon contracts, by administering
the remedy for their breach, or otherwise, is
the usual exercise of legislative power. The interference
with those contracts, by introducing conditions into them
not agreed to by the parties, would be a very unusual and
a very extraordinary exercise of the legislative power,
which ought not to be gratuitously attributed to laws that
do not profess to claim it. If the law becomes a part of the
contract, change of place would not expunge the condition.
A contract made in New-York would be the same in
any other State as in New-York, and would still retain the
stipulation originally introduced into it, that the debtor
should be discharged by the surrender of his estate.

It is not, we think, true, that contracts are entered into
in contemplation of the insolvency of the obligor. They are
framed with the expectation that they will be literally performed.
Insolvency is undoubtedly a casualty which is possible,
but is never expected. In the ordinary course of human
transactions, if even suspected, provision is made for
it, by taking security against it. When it comes unlooked
for, it would be entirely contrary to reason to consider it
as a part of the contract.

We have, then, no hesitation in saying that, however law
[Volume 3, Page 453]
may act upon contracts, it does not enter into them, and
become a part of the agreement. The effect of such a principle
would be a mischievous abridgment of legislative
power over subjects within the proper jurisdiction of
States, by arresting their power to repeal or modify such
laws with respect to existing contracts.

But, although the argument is not sustainable in this
form, it assumes another, in which it is more plausible.
Contract, it is said, being the creature of society, derives
its obligation from the law; and, although the law may not
enter into the agreement so as to form a constituent part
of it, still it acts externally upon the contract, and determines
how far the principle of coercion shall be applied to
it; and this being universally understood, no individual can
complain justly of its application to himself, in a case
where it was known when the contract was formed.

This argument has been illustrated by references to the
statutes of frauds, of usury, and of limitations. The construction
of the words in the constitution, respecting contracts,
for which the defendants contend, would, it has
been said, withdraw all these subjects from State legislation.
The acknowledgment, that they remain within it, is
urged as an admission, that contract is not withdrawn by
the constitution, but remains under State control, subject
to this restriction only, that no law shall be passed impairing
the obligation of contracts in existence at its passage.

The defendants maintain that an error lies at the very
foundation of this argument. It assumes that contract is
the mere creature of society, and derives all its obligation
from human legislation. That it is not the stipulation an
individual makes which binds him, but some declaration
of the supreme power of a State to which he belongs, that
he shall perform what he has undertaken to perform.
That though this original declaration may be lost in remote
antiquity, it must be presumed as the origin of the
obligation of contracts. This postulate the defendants
deny, and, we think, with great reason.

It is an argument of no inconsiderable weight against it,
that we find no trace of such an enactment. So far back as
human research carries us, we find the judicial power as a
part of the executive, administering justice by the application
of remedies to violated rights, or broken contracts.
We find that power applying these remedies on the idea
of a pre-existing obligation on every man to do what he
has promised on consideration to do; that the breach of
this obligation is an injury for which the injured party has
a just claim to compensation, and that society ought to afford
him a remedy for that injury. We find allusions to the
mode of acquiring property, but we find no allusion, from
the earliest time, to any supposed act of the governing
power giving obligation to contracts. On the contrary, the
proceedings respecting them of which we know any thing,
evince the idea of a pre-existing intrinsic obligation which
human law enforces. If, on tracing the right to contract,
and the obligations created by contract, to their source, we
find them to exist anterior to, and independent of society,
we may reasonably conclude that those original and preexisting
principles are, like many other natural rights,
brought with man into society; and, although they may be
controlled, are not given by human legislation.

In the rudest state of nature a man governs himself, and
labours for his own purposes. That which he acquires is
his own, at least while in his possession, and he may transfer
it to another. This transfer passes his right to that
other. Hence the right to barter. One man may have acquired
more skins than are necessary for his protection
from the cold; another more food than is necessary for his
immediate use. They agree each to supply the wants of the
other from his surplus. Is this contract without obligation?
If one of them, having received and eaten the food he
needed, refuses to deliver the skin, may not the other
rightfully compel him to deliver it? Or two persons agree
to unite their strength and skill to hunt together for their
mutual advantage, engaging to divide the animal they shall
master. Can one of them rightfully take the whole? or,
should he attempt it, may not the other force him to a
division? If the answer to these questions must affirm the
duty of keeping faith between these parties, and the right
to enforce it if violated, the answer admits the obligation
of contracts, because, upon that obligation depends the
right to enforce them. Superior strength may give the
power, but cannot give the right. The rightfulness of coercion
must depend on the pre-existing obligation to do that
for which compulsion is used. It is no objection to the
principle, that the injured party may be the weakest. In
society, the wrong-doer may be too powerful for the law.
He may deride its coercive power, yet his contracts are
obligatory; and, if society acquire the power of coercion,
that power will be applied without previously enacting that
his contract is obligatory.

Independent nations are individuals in a state of nature.
Whence is derived the obligation of their contracts? They
admit the existence of no superior legislative power which
is to give them validity, yet their validity is acknowledged
by all. If one of these contracts be broken, all admit the
right of the injured party to demand reparation for the
injury, and to enforce that reparation if it be withheld. He
may not have the power to enforce it, but the whole civilized
world concurs in saying, that the power, if possessed,
is rightfully used.

In a state of nature, these individuals may contract, their
contracts are obligatory, and force may rightfully be employed
to coerce the party who has broken his engagement.

What is the effect of society upon these rights? When
men unite together and form a government, do they surrender
their right to contract, as well as their right to enforce
the observance of contracts? For what purpose
should they make this surrender? Government cannot exercise
this power for individuals. It is better that they
should exercise it for themselves. For what purpose, then,
should the surrender be made? It can only be, that government
may give it back again. As we have no evidence
of the surrender, or of the restoration of the right; as this
operation of surrender and restoration would be an idle
and useless ceremony, the rational inference seems to be,
that neither has ever been made; that individuals do not
derive from government their right to contract, but bring
that right with them into society; that obligation is not conferred
on contracts by positive law, but is intrinsic, and is
[Volume 3, Page 454]
conferred by the act of the parties. This results from the
right which every man retains to acquire property, to dispose
of that property according to his own judgment, and
to pledge himself for a future act. These rights are not
given by society, but are brought into it. The right of coercion
is necessarily surrendered to government, and this
surrender imposes on government the correlative duty of
furnishing a remedy. The right to regulate contracts, to
prescribe rules by which they shall be evidenced, to prohibit
such as may be deemed mischievous, is unquestionable,
and has been universally exercised. So far as this
power has restrained the original right of individuals to
bind themselves by contract, it is restrained; but beyond
these actual restraints the original power remains unimpaired.

This reasoning is, undoubtedly, much strengthened by
the authority of those writers on natural and national law,
whose opinions have been viewed with profound respect
by the wisest men of the present, and of past ages.

Supposing the obligation of the contract to be derived
from the agreement of the parties, we will inquire how far
law acts externally on it, and may control that obligation.
That law may have, on future contracts, all the effect
which the counsel for the plaintiff in error claim, will not
be denied. That it is capable of discharging the debtor under
the circumstances, and on the conditions prescribed in
the statute which has been pleaded in this case, will not be
controverted. But as this is an operation which was not
intended by the parties, nor contemplated by them, the
particular act can be entitled to this operation only when
it has the full force of law. A law may determine the obligation
of a contract on the happening of a contingency,
because it is the law. If it be not the law, it cannot have
this effect. When its existence as law is denied, that existence
cannot be proved by showing what are the qualities
of a law. Law has been defined by a writer, whose definitions
especially have been the theme of almost universal
panegyric, "to be a rule of civil conduct prescribed by the
supreme power in a State." In our system, the legislature
of a State is the supreme power, in all cases where its action
is not restrained by the constitution of the United
States. Where it is so restrained, the legislature ceases to
be the supreme power, and its acts are not law. It is, then,
begging the question to say, that, because contracts may be
discharged by a law previously enacted, this contract may
be discharged by this act of the legislature of New-York;
for the question returns upon us, is this act a law? Is it
consistent with, or repugnant to, the constitution of the
United States? This question is to be solved only by the
constitution itself.

In examining it, we readily admit, that the whole subject
of contracts is under the control of society, and that all the
power of society over it resides in the State legislatures,
except in those special cases where restraint is imposed by
the constitution of the United States. The particular restraint
now under consideration is on the power to impair
the obligation of contracts. The extent of this restraint
cannot be ascertained by showing that the legislature may
prescribe the circumstances, on which the original validity
of a contract shall be made to depend. If the legislative
will be, that certain agreements shall be in writing, that
they shall be sealed, that they shall be attested by a certain
number of witnesses, that they shall be recorded, or that
they shall assume any prescribed form before they become
obligatory, all these are regulations which society may
rightfully make, and which do not come within the restrictions
of the constitution, because they do not impair the
obligation of the contract. The obligation must exist before
it can be impaired; and a prohibition to impair it, when
made, does not imply an inability to prescribe those circumstances
which shall create its obligation. The statutes
of frauds, therefore, which have been enacted in the several
States, and which are acknowledged to flow from the
proper exercise of State sovereignty, prescribe regulations
which must precede the obligation of the contract, and,
consequently, cannot impair that obligation. Acts of this
description, therefore, are most clearly not within the prohibition
of the constitution.

The acts against usury are of the same character. They
declare the contract to be void in the beginning. They
deny that the instrument ever became a contract. They
deny it all original obligation; and cannot impair that
which never came into existence.

Acts of limitations approach more nearly to the subject
of consideration, but are not identified with it. They defeat
a contract once obligatory, and may, therefore, be supposed
to partake of the character of laws which impair its
obligation. But a practical view of the subject will show us
that the two laws stand upon distinct principles.

In the case of Sturges v. Crowninshield, it was observed
by the Court, that these statutes relate only to the remedies
which are furnished in the Courts; and their language is
generally confined to the remedy. They do not purport to
dispense with the performance of a contract, but proceed
on the presumption that a certain length of time, unexplained
by circumstances, is reasonable evidence of a performance.
It is on this idea alone that it is possible to sustain
the decision, that a bare acknowledgment of the debt,
unaccompanied with any new promise, shall remove the
bar created by the act. It would be a mischief not to be
tolerated, if contracts might be set up at any distance of
time, when the evidence of payment might be lost, and the
estates of the dead, or even of the living, be subjected to
these stale obligations. The principle is, without the aid of
a statute, adopted by the Courts as a rule of justice. The
legislature has enacted no statute of limitations as a bar to
suits on sealed instruments. Yet twenty years of unexplained
silence on the part of the creditor is evidence of
payment. On parol contracts, or on written contracts not
under seal, which are considered in a less solemn point of
view than sealed instruments, the legislature has supposed
that a shorter time might amount to evidence of performance,
and has so enacted. All have acquiesced in these
enactments, but have never considered them as being of
that class of laws which impair the obligation of contracts.
In prescribing the evidence which shall be received in its
Courts, and the effect of that evidence, the State is exercising
its acknowledged powers. It is likewise in the exercise
[Volume 3, Page 455]
of its legitimate powers, when it is regulating the remedy
and mode of proceeding in its Courts.

The counsel for the plaintiff in error insist, that the
right to regulate the remedy and to modify the obligation
of the contract are the same; that obligation and remedy
are identical, that they are synonymous--two words conveying
the same idea.

The answer given to this proposition by the defendant's
counsel seems to be conclusive. They originate at different
times. The obligation to perform is coeval with the undertaking
to perform; it originates with the contract itself, and
operates anterior to the time of performance. The remedy
acts upon a broken contract, and enforces a pre-existing
obligation.

If there be any thing in the observations made in a preceding
part of this opinion respecting the source from
which contracts derive their obligation, the proposition we
are now considering cannot be true. It was shown, we
think, satisfactorily, that the right to contract is the attribute
of a free agent, and that he may rightfully coerce
performance from another free agent who violates his
faith. Contracts have, consequently, an intrinsic obligation.
When men come into society, they can no longer exercise
this original and natural right of coercion. It would be incompatible
with general peace, and is, therefore, surrendered.
Society prohibits the use of private individual coercion,
and gives in its place a more safe and more certain
remedy. But the right to contract is not surrendered with
the right to coerce performance. It is still incident to that
degree of free agency which the laws leave to every individual,
and the obligation of the contract is a necessary
consequence of the right to make it. Laws regulate this
right, but, where not regulated, it is retained in its original
extent. Obligation and remedy, then, are not identical;
they originate at different times, and are derived from different
sources.

But, although the identity of obligation and remedy be
disproved, it may be, and has been urged, that they are
precisely commensurate with each other, and are such
sympathetic essences, if the expression may be allowed,
that the action of law upon the remedy is immediately felt
by the obligation--that they live, languish, and die together.
The use made of this argument is to show the absurdity
and self-contradiction of the construction which
maintains the inviolability of obligation, while it leaves the
remedy to the State governments.

We do not perceive this absurdity or self-contradiction.

Our country exhibits the extraordinary spectacle of distinct,
and, in many respects, independent governments
over the same territory and the same people. The local
governments are restrained from impairing the obligation
of contracts, but they furnish the remedy to enforce them,
and administer that remedy in tribunals constituted by
themselves. It has been shown that the obligation is distinct
from the remedy, and, it would seem to follow, that law
might act on the remedy without acting on the obligation.
To afford a remedy is certainly the high duty of those who
govern to those who are governed. A failure in the performance
of this duty subjects the government to the just reproach
of the world. But the constitution has not undertaken
to enforce its performance. That instrument treats
the States with the respect which is due to intelligent
beings, understanding their duties, and willing to perform
them; not as insane beings, who must be compelled to act
for self-preservation. Its language is the language of restraint,
not of coercion. It prohibits the States from passing
any law impairing the obligation of contracts; it does
not enjoin them to enforce contracts. Should a State be
sufficiently insane to shut up or abolish its Courts, and
thereby withhold all remedy, would this annihilation of
remedy annihilate the obligation also of contracts? We
know it would not. If the debtor should come within the
jurisdiction of any Court of another State, the remedy
would be immediately applied, and the inherent obligation
of the contract enforced. This cannot be ascribed to a renewal
of the obligation; for passing the line of a State cannot
re-create an obligation which was extinguished. It
must be the original obligation derived from the agreement
of the parties, and which exists unimpaired though
the remedy was withdrawn.

But, we are told, that the power of the State over the
remedy may be used to the destruction of all beneficial
results from the right; and hence it is inferred, that the
construction which maintains the inviolability of the obligation,
must be extended to the power of regulating the
remedy.

The difficulty which this view of the subject presents,
does not proceed from the identity or connexion of right
and remedy, but from the existence of distinct governments
acting on kindred subjects. The constitution contemplates
restraint as to the obligation of contracts, not as to the application
of remedy. If this restraint affects a power which
the constitution did not mean to touch, it can only be when
that power is used as an instrument of hostility to invade
the inviolability of contract, which is placed beyond its
reach. A State may use many of its acknowledged powers
in such manner as to come in conflict with the provisions
of the constitution. Thus the power over its domestic police,
the power to regulate commerce purely internal, may
be so exercised as to interfere with regulations of commerce
with foreign nations, or between the States. In such
cases, the power which is supreme must control that which
is not supreme, when they come in conflict. But this principle
does not involve any self-contradiction, or deny the
existence of the several powers in the respective governments.
So, if a State shall not merely modify, or withhold
a particular remedy, but shall apply it in such manner as
to extinguish the obligation without performance, it would
be an abuse of power which could scarcely be misunderstood,
but which would not prove that remedy could not
be regulated without regulating obligation.

The counsel for the plaintiff in error put a case of more
difficulty, and urge it as a conclusive argument against the
existence of a distinct line dividing obligation from remedy.
It is this. The law affords remedy by giving execution
against the person, or the property, or both. The same
power which can withdraw the remedy against the person,
can withdraw that against the property, or that against
[Volume 3, Page 456]
both, and thus effectually defeat the obligation. The constitution,
we are told, deals not with form, but with substance;
and cannot be presumed, if it designed to protect
the obligation of contracts from State legislation, to have
left it thus obviously exposed to destruction.

The answer is, that if the law goes farther, and annuls
the obligation without affording the remedy which satisfies
it, if its action on the remedy be such as palpably to impair
the obligation of the contract, the very case arises which
we suppose to be within the constitution. If it leaves the
obligation untouched, but withholds the remedy, or affords
one which is merely nominal, it is like all other cases
of misgovernment, and leaves the debtor still liable to his
creditor, should he be found, or should his property be
found, where the laws afford a remedy. If that high sense
of duty which men selected for the government of their
fellow citizens must be supposed to feel, furnishes no security
against a course of legislation which must end in
self-destruction; if the solemn oath taken by every member,
to support the constitution of the United States, furnishes
no security against intentional attempts to violate its
spirit while evading its letter;--the question how far the
constitution interposes a shield for the protection of an
injured individual, who demands from a Court of justice
that remedy which every government ought to afford, will
depend on the law itself which shall be brought under
consideration. The anticipation of such a case would be
unnecessarily disrespectful, and an opinion on it would be,
at least, premature. But, however the question might be
decided, should it be even determined that such a law
would be a successful evasion of the constitution, it does
not follow, that an act which operates directly on the contract
after it is made, is not within the restriction imposed
on the States by that instrument. The validity of a law acting
directly on the obligation, is not proved by showing
that the constitution has provided no means for compelling
the States to enforce it.

We perceive, then, no reason for the opinion, that the
prohibition "to pass any law impairing the obligation of
contracts," is incompatible with the fair exercise of that
discretion, which the State legislatures possess in common
with all governments, to regulate the remedies afforded by
their own Courts. We think, that obligation and remedy
are distinguishable from each other. That the first is created
by the act of the parties, the last is afforded by government.
The words of the restriction we have been considering,
countenance, we think, this idea. No State shall
"pass any law impairing the obligation of contracts." These
words seems to us to import, that the obligation is intrinsic,
that it is created by the contract itself, not that it is dependent
on the laws made to enforce it. When we advert to
the course of reading generally pursued by American
statesmen in early life, we must suppose, that the framers
of our constitution were intimately acquainted with the
writings of those wise and learned men, whose treatises on
the laws of nature and nations have guided public opinion
on the subjects of obligation and contract. If we turn to
those treatises, we find them to concur in the declaration,
that contracts possess an original intrinsic obligation, derived
from the acts of free agents, and not given by government.
We must suppose, that the framers of our constitution
took the same view of the subject, and the
language they have used confirms this opinion.

The propositions we have endeavoured to maintain, of
the truth of which we are ourselves convinced, are these:

That the words of the clause in the constitution which
we are considering, taken in their natural and obvious
sense, admit of a prospective, as well as of a retrospective,
operation.

That an act of the legislature does not enter into the
contract, and become one of the conditions stipulated by
the parties; nor does it act externally on the agreement,
unless it have the full force of law.

That contracts derive their obligation from the act of the
parties, not from the grant of government; and that the
right of government to regulate the manner in which they
shall be formed, or to prohibit such as may be against the
policy of the State, is entirely consistent with their inviolability
after they have been formed.

That the obligation of a contract is not identified with
the means which government may furnish to enforce it;
and that a prohibition to pass any law impairing it, does
not imply a prohibition to vary the remedy; nor does a
power to vary the remedy, imply a power to impair the
obligation derived from the act of the parties.

We cannot look back to the history of the times when
the august spectacle was exhibited of the assemblage of a
whole people by their representatives in Convention, in
order to unite thirteen independent sovereignties under
one government, so far as might be necessary for the purposes
of union, without being sensible of the great importance
which was at that time attached to the tenth section
of the first article. The power of changing the relative situation
of debtor and creditor, of interfering with contracts,
a power which comes home to every man, touches
the interest of all, and controls the conduct of every individual
in those things which he supposes to be proper for
his own exclusive management, had been used to such an
excess by the State legislatures, as to break in upon the
ordinary intercourse of society, and destroy all confidence
between man and man. The mischief had become so
great, so alarming, as not only to impair commercial intercourse,
and threaten the existence of credit, but to sap the
morals of the people, and destroy the sanctity of private
faith. To guard against the continuance of the evil was an
object of deep interest with all the truly wise, as well as the
virtuous, of this great community, and was one of the important
benefits expected from a reform of the government.

To impose restraints on State legislation as respected
this delicate and interesting subject, was thought necessary
by all those patriots who could take an enlightened and
comprehensive view of our situation; and the principle obtained
an early admission into the various schemes of government
which were submitted to the Convention. In
framing an instrument, which was intended to be perpetual,
the presumption is strong, that every important principle
introduced into it is intended to be perpetual also;
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that a principle expressed in terms to operate in all future
time, is intended so to operate. But if the construction for
which the plaintiff's counsel contend be the true one, the
constitution will have imposed a restriction in language indicating
perpetuity, which every State in the Union may
elude at pleasure. The obligation of contracts in force, at
any given time, is but of short duration; and, if the inhibition
be of retrospective laws only, a very short lapse of
time will remove every subject on which the act is forbidden
to operate, and make this provision of the constitution
so far useless. Instead of introducing a great principle,
prohibiting all laws of this obnoxious character, the constitution
will only suspend their operation for a moment, or
except from it pre-existing cases. The object would
scarcely seem to be of sufficient importance to have found
a place in that instrument.

This construction would change the character of the
provision, and convert an inhibition to pass laws impairing
the obligation of contracts, into an inhibition to pass retrospective
laws. Had this been the intention of the Convention,
is it not reasonable to believe that it would have been
so expressed? Had the intention been to confine the restriction
to laws which were retrospective in their operation,
language could have been found, and would have
been used, to convey this idea. The very word would have
occurred to the framers of the instrument, and we should
have probably found it in the clause. Instead of the general
prohibition to pass any "law impairing the obligation
of contracts," the prohibition would have been to the passage
of any retrospective law. Or, if the intention had been
not to embrace all retrospective laws, but those only which
related to contracts, still the word would have been introduced,
and the State legislatures would have been forbidden
"to pass any retrospective law impairing the obligation
of contracts," or "to pass any law impairing the obligation
of contracts previously made." Words which directly and
plainly express the cardinal intent, always present themselves
to those who are preparing an important instrument,
and will always be used by them. Undoubtedly there
is an imperfection in human language, which often exposes
the same sentence to different constructions. But it
is rare, indeed, for a person of clear and distinct perceptions,
intending to convey one principal idea, so to express
himself as to leave any doubt respecting that idea. It may
be uncertain whether his words comprehend other things
not immediately in his mind; but it can seldom be uncertain
whether he intends the particular thing to which his
mind is specially directed. If the mind of the Convention,
in framing this prohibition, had been directed, not generally
to the operation of laws upon the obligation of contracts,
but particularly to their retrospective operation, it is
scarcely conceivable that some word would not have been
used indicating this idea. In instruments prepared on
great consideration, general terms, comprehending a
whole subject, are seldom employed to designate a particular,
we might say, a minute portion of that subject. The
general language of the clause is such as might be suggested
by a general intent to prohibit State legislation on
the subject to which that language is applied--the obligation
of contracts; not such as would be suggested by a particular
intent to prohibit retrospective legislation.

It is also worthy of consideration, that those laws which
had effected all that mischief the constitution intended to
prevent, were prospective as well as retrospective, in their
operation. They embraced future contracts, as well as
those previously formed. There is the less reason for imputing
to the Convention an intention, not manifested by
their language, to confine a restriction intended to guard
against the recurrence of those mischiefs, to retrospective
legislation. For these reasons, we are of opinion, that, on
this point, the District Court of Louisiana has decided
rightly.